South Korea gives conditional approval to KAL-Asiana merger

South Korea's antitrust watchdog on Tuesday gave conditional approval for the merger of the country's two biggest airlines but expressed concern that their dominance in domestic and international routes would harm competition in the industry. Korea Fair Trade Commission Chair Joh Sung-wook said the agency ordered Korean Air Lines to return slots and traffic rights as well as cap fare increases for 40 domestic and international routes after merging with smaller rival Asiana Airlines. The routes include 26 international routes and 14 domestic ones such as Seoul-New York, Seoul-London, Seoul-Beijing and Busan-Nagoya. "The company will become very superior with the merger in the comprehensive management in slots and traffic rights as well as access to airport facilities," Joh said at a news conference. "In contrast, its competitors will have problems entering markets or increasing flights due to lack of slots and limited traffic rights." The KFTC said the merged company will account for 48.9% of domestic market share and hold 62% of routes to the southern island of Jeju. For international routes, it will have 10 that are exclusive and will hold more than 60% of the market share on 29 routes. The decision comes one year after KAL announced that it would buy a 63.9% stake in Asiana by acquiring 130 million new shares issued by the company. It was part of the government's reconstruction plan for the airline industry as they were struggling to survive the coronavirus pandemic. It marks the first time that the regulator reviewed a merger between South Korean full-service carriers. And it is also the first time that the commission imposed structural actions. <br/>