Korean Air closes deal for Asiana takeover

Aircraft from Korean Air and Asiana Airlines are seen parked on the tarmac at Incheon International Airport in this Nov. 28 photo. Yonhap Jeju Air in growing dilemma over emerging threat from converged LCCs By Lee Min-hyung Korean Air closed its long-delayed deal to take over Asiana Airlines on Wednesday, paying the remaining 800 billion won ($558.

58 million) to secure a controlling stake in the cash-strapped airline. This allows the nation’s flag carrier to secure a stake of 63.88 percent in Asiana.



Korean Air has so far injected a total of 1.5 trillion won to complete the high-profile acquisition and launch the mega-sized full-service carrier. Starting Thursday, Asiana Airlines will be incorporated as a subsidiary of Korean Air.

The converged carrier is set to become the world’s 11th largest airline by annual passenger volume. It will also operate a total of 238 aircraft and employ some 27,000 staff. Korean Air will manage Asiana Airlines as a separate entity for the next two years, while undertaking a comprehensive integration process, including aligning corporate cultures and merging their mileage programs.

In January, the flag carrier plans to appoint new leaders for Asiana Airlines and its two low-cost carrier (LCC) subsidiaries — Air Busan and Air Seoul — via Asiana's temporary shareholders' meeting as part of their first manpower adjustment. Korean Air also operates its LCC subsidiary — Jin Air. The three LCCs under Korean Air and Asiana Airlines will be merged in phases, with specific timelines to be announced down the road.

This will pose a direct threat to Jeju Air, the nation’s largest LCC by market capitalization, as the airline is feared to yield the position to the converged LCC launched by Korean Air. As of 2023, combined sales for Jin Air, Air Busan and Air Seoul reached 2.47 trillion won, up by around 700 billion won from that of Jeju Air during the same period.

For now, T’way Air is the biggest rival of Jeju Air. But the former benefited from the Korean Air-Asiana Airlines deal after the flag carrier transferred four European routes to T’way to alleviate its monopoly concern raised by overseas competition authorities. Jin Air's Boeing 737-800 passenger jet / Courtesy of Jin Air Chances are Jeju Air pushes for the takeover of Eastar Jet once again.

Eastar Jet suspended its flight operations during the early phases of the COVID-19 pandemic and resumed its operations in 2023. Jeju Air is also expected to speed up its expansion in the cargo business, as part of its efforts to find new growth engines and tackle the escalating rivalry posed by the upcoming launch of the mega LCC. On the same day, the government shared its plan to thoroughly supervise the remaining procedure for the smooth integration of the two full-service carriers.

The Ministry of Land, Infrastructure and Transport plans to allocate more mid- to long-haul flight routes to territories, such as Europe and Southwest Asia, to LCCs, in a move to ease lingering monopoly concerns after the deal is complete. Korean Air should also submit its concrete plans on how to fairly merge the mileage points from the two carriers to the Fair Trade Commission (FTC) in less than six months. As Korean Air’s mileage points are typically valued higher in the market than those of Asiana, it is tough to integrate their mileage points at a one-on-one ratio.

But if Korean Air ends up valuing Asiana customers’ mileage points less, this will draw strong backlash from existing customers of Asiana. “We will support domestic LCCs’ expansion in their new flight routes, so as to minimize any customer damages stemming from the possible monopoly of the converged full-service carrier,” Land Minister Park Sang-woo said. “The authority will also team up with the FTC and other relevant organizations to ensure that customers will not be disadvantaged by the mileage combination and airfare following their integration.

” Korean Air is set to unveil details of its management strategy after the much-awaited takeover of Asiana soon. Asiana Airlines will hold an extraordinary shareholder’s meeting on Jan. 16 next year, and undergo its executive reshuffle, including its new leader.

Spokespersons from Korean Air and Asiana Airlines declined to comment on details of the upcoming executive reshuffle. The high-profile acquisition was announced in November 2020. Korean Air paid a deposit of 300 billion won the following month for the deal, and made an interim payment of 400 billion won in March 2021.

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