KOREAN Air's acquisition of Asiana Airlines is at risk of falling apart due to concerns from the United States and the European Union regarding reduced competition on certain cargo routes, reports New York's FreightWaves.
The us Department of Justice is contemplating taking legal action to block the merger, as it fears that the combined airline would have a dominant position on routes to the US that they currently compete on for both passenger and cargo traffic.
Korean Air and Asiana Airlines operate flights to cities such as San Francisco, Los Angeles, Seattle, New York City and Honolulu.
Korean Air currently possesses a fleet of 23 freighters, including seven Boeing 747-8 and a dozen 777 aircraft. It ranks as the world's fifth-largest cargo carrier by volume, excluding express parcel carriers FedEx and UPS. On the other hand, Asiana operates ten Boeing 747 freighters and one 767, as reported by Flightradar24.
Politico cited three sources familiar with the matter, one of whom stated that the Biden administration is concerned that the merger would result in excessive control of cargo transportation for crucial goods like microchips, which could negatively impact supply chain resilience.
Recently, the European Union's antitrust regulator informed Korean Air of its objection to the proposed acquisition of Asiana, citing potential reductions in passenger and cargo competition between Europe and South Korea. Korean Air had agreed in November 2020 to acquire a majority stake in Asiana following encouragement from the South Korean government.
The merger is still under review by the Japanese government. However, it has received approval from 11 competition authorities worldwide.
South Korean regulators granted approval for the merger on the condition that the merged entity relinquishes flights to other airlines on routes where it holds a significant market share.
The United Kingdom's Competition and Markets Authority approved the merger on March 1 after Korean Air agreed to surrender certain airport slots and form a partnership with Virgin Atlantic on the London Heathrow - Seoul route.
As a requirement for China's approval in December, Korean Air will transfer slots to any new airlines interested in commencing air services on nine routes where Korean Air and Asiana currently operate.
While the US Justice Department has not responded to the Politico report, the Biden administration has demonstrated a pro-consumer stance in opposing consolidation across various industries.
Earlier this year, the Justice Department filed a lawsuit to block JetBlue's US$3.8 billion acquisition of Spirit Airlines, and a judge recently ruled that JetBlue and American Airlines must terminate their alliance in the Northeast corridor following a lawsuit by the US government.
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The us Department of Justice is contemplating taking legal action to block the merger, as it fears that the combined airline would have a dominant position on routes to the US that they currently compete on for both passenger and cargo traffic.
Korean Air and Asiana Airlines operate flights to cities such as San Francisco, Los Angeles, Seattle, New York City and Honolulu.
Korean Air currently possesses a fleet of 23 freighters, including seven Boeing 747-8 and a dozen 777 aircraft. It ranks as the world's fifth-largest cargo carrier by volume, excluding express parcel carriers FedEx and UPS. On the other hand, Asiana operates ten Boeing 747 freighters and one 767, as reported by Flightradar24.
Politico cited three sources familiar with the matter, one of whom stated that the Biden administration is concerned that the merger would result in excessive control of cargo transportation for crucial goods like microchips, which could negatively impact supply chain resilience.
Recently, the European Union's antitrust regulator informed Korean Air of its objection to the proposed acquisition of Asiana, citing potential reductions in passenger and cargo competition between Europe and South Korea. Korean Air had agreed in November 2020 to acquire a majority stake in Asiana following encouragement from the South Korean government.
The merger is still under review by the Japanese government. However, it has received approval from 11 competition authorities worldwide.
South Korean regulators granted approval for the merger on the condition that the merged entity relinquishes flights to other airlines on routes where it holds a significant market share.
The United Kingdom's Competition and Markets Authority approved the merger on March 1 after Korean Air agreed to surrender certain airport slots and form a partnership with Virgin Atlantic on the London Heathrow - Seoul route.
As a requirement for China's approval in December, Korean Air will transfer slots to any new airlines interested in commencing air services on nine routes where Korean Air and Asiana currently operate.
While the US Justice Department has not responded to the Politico report, the Biden administration has demonstrated a pro-consumer stance in opposing consolidation across various industries.
Earlier this year, the Justice Department filed a lawsuit to block JetBlue's US$3.8 billion acquisition of Spirit Airlines, and a judge recently ruled that JetBlue and American Airlines must terminate their alliance in the Northeast corridor following a lawsuit by the US government.
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