Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Korean Air to transfer control of 5 airplanes, 100 pilots to T'way for Asiana takeover
A passenger jet from Korean Air / Yonhap
By Lee Min-hyung
Korean Air is expected to transfer control of five passenger jets and dispatch around 100 pilots to T’way Air, in a move to alleviate monopoly concerns claimed by European antitrust authorities regarding its takeover of Asiana Airlines, according to industry officials, Monday.
Once the European Commission (EC) approves Korean Air's takeover of Asiana, T’way will secure rights from Korean Air to operate routes from Korea to Frankfurt, Paris, Rome and Barcelona. This comes in response to the European authority’s repeated objections to the high-profile acquisition.
Earlier, the EC said the deal could hamper fair competition in the aforementioned air routes. It is also known to have demanded Korean Air allow T’way to operate the four routes to Europe for at least three years without retrieving slots for the routes during that period.
Aviation industry sources said Korean Air is still fine-tuning the details before possibly receiving EC approval for the takeover.
“Two key proposals made by Korean Air include the transfer of passenger jets and traffic rights, and sales of Asiana’s cargo business,” an industry official said. “The industry expects the EC to make its decision on whether to approve the long-dragged takeover sometime as early as the end of October.”
It remains unclear whether the low-cost carrier (LCC) will be able to operate the routes to Europe stably. If it fails to do so, it may end up giving up the slots to overseas counterparts.
In any case, the EC is expected to disallow Korean Air to regain the rights, citing monopolistic concerns in the routes after acquiring Asiana, and as such, the EC is reviewing the financial structures of T’way.
“We cannot share our official stance for the time being, as was agreed upon with the European authority. But details will be made public soon,” a spokesman at Korean Air said.
Korean Air is facing other obstacles before closing the deal, as Asiana Airlines’ board of directors will have to approve the sale of its cargo unit during its upcoming meeting later this month. Asiana’s cargo business accounted for 20 percent of its sales in the first half of this year.
More than four out of the six Asiana board members need to vote in favor of the sale, but nothing specific has been confirmed amid lingering fears of the outflow of national wealth.
In addition, the possible sales of Asiana’s cargo business can be seen as a de facto restructuring, so the board members have yet to reach any final internal consensus on the issue.
“The timeline for the board meeting has not been fixed, and we have yet to fix any details on the issue,” an official from Asiana Airlines said.