Malaysia proposes to approve Korean Air-Asiana merger

Malaysia’s aviation regulators have proposed to approve the merger between Korean Air and Asiana Airlines, noting that the move “would not infringe” local laws. In findings released on 17 August, the Malaysian Aviation Commission (Mavcom) took the view that there were “significant economic efficiencies or social benefits” with the merger, while noting that it would “have limited unilateral effects” on airfares. Mavcom scoped its analysis on one direct route between South Korea and Malaysia — Seoul-Kota Kinabalu — given that both Korean Air sister company Jin Air and Asiana low-cost arm Air Seoul operate the route. Jeju Air, a low-cost carrier unaffiliated to the merger, is the third Korean carrier to operate direct flights between both cities. The commission found that although the post-merger market share on the route would be high — based on 70-80% share in a pre-pandemic setting — it “would have limited unilateral effects as the parties will not be able to increase the airfares above competitive levels”. This is because South Korea’s Ministry of Land, Infrastructure and Transport regulates airfares set by the country’s carriers. “The commission also notes that the…route is a relatively thin route. Given the nature of the route where majority of the passengers are non-time sensitive, there is limited impact on the passengers as they would always have the option to choose one-stop services instead,” Mavcom adds. <br/>