The Fair Trade Commission has decided to hold a plenary meeting to review whether the fare increase by Asiana Airlines violated the merger conditions with Korean Air. The issue at hand is whether it exceeded the corrective action criteria imposed by the Fair Trade Commission at the time of merger approval.
According to the industry on the 1st, the Fair Trade Commission is scheduled to hold a plenary meeting on July 23 to review the fare increase case of Asiana Airlines. The Ministry of Land, Infrastructure and Transport and the Fair Trade Commission have been monitoring fare and seating supply on a quarterly basis since the merger of Korean Air and Asiana Airlines. It has been reported that some recent fare fluctuations may have exceeded the corrective action criteria.
The Fair Trade Commission conditionally approved the merger between Korean Air and Asiana Airlines in 2022, imposing structural and behavioral corrective actions on 40 routes (26 international and 14 domestic) that raised significant competition concerns among the 87 routes that both companies operate.
Among the behavioral measures are: ▲ Prohibition of fare increases beyond the inflation rate compared to 2019 ▲ Prohibition of reducing seat supply to less than 90% compared to 2019 ▲ Prohibition of unfavorable changes to the mileage program. It is anticipated that whether Asiana's fare increase constitutes a violation of such "behavioral corrective actions" will be the core issue of the plenary meeting.
Asiana Airlines adjusted ticket prices on major routes successively in March. The economy class fares for Southeast Asian routes such as Bangkok, Cebu, Da Nang, and Chiang Mai have generally increased, and prices for the Taipei route have also risen. For routes to the Americas, some routes have had reduced discount benefits, such as the early termination of special fares to San Francisco. Depending on the timing of the fare adjustments and sales conditions, some routes have effectively seen price increases.
If a violation of merger conditions is recognized at the Fair Trade Commission plenary meeting, sanctions such as imposition of fines may be enacted. However, depending on the severity of the violation or intention, it could result in administrative guidance at the warning level, and if deemed minor, there may be a possibility of a non-indictment conclusion.
The Fair Trade Commission previously stated, "As this is a matter of great public interest, we will closely monitor to ensure that excessive fare increases, supply reductions, and deterioration of mileage programs do not occur," adding, "We plan to work closely with the Ministry of Land, Infrastructure and Transport to prevent consumer harm."