Korean Air has reportedly submitted a corrective action plan for its proposed merger with Asiana Airlines to European Union (EU) competition authorities. The corrective action plan includes giving up Asiana Airlines’ cargo slots.
On Sept. 25, insiders of the investment banking industry said that Korean Air handed in the plan to the EU earlier this week, which included a proposal to sell off the entire cargo business division and adjust passenger slots (the numbers of takeoffs and landings allowed per hour) on some routes to the EU.
EU competition authorities previously refused to approve the two Korean airlines’ marriage in May in an interim review report. The EU believed that the combination would hamper competition in passenger transportation services on four routes –- those between Korea and France, Germany, Italy, and Spain and cargo transportation between Korea and Europe as a whole.
Korean Air’s plan can address many of the EU’s concerns about the merger, in particular, an increase in the Korean airline’s global market share.
However, if the merger is completed in accordance with the plan, it will effectively break up Asiana Airlines, raising criticism that the merger is of no use. A merger between Korean Air and Asiana was aimed at sharpening the competitiveness of Korea’s national flag carrier in the first place, but the sale of Asiana’s cargo division and the return of slots will weaken its competitiveness, experts say.
Korean Air is currently waiting for approval from the EU, the U.S. Department of Justice (DOJ), and Japan before it can marry Asiana.