The Fair Trade Commission has imposed a fine of 12.1 billion won on Asiana Airlines for violating the conditions of its merger with Korean Air and has decided to refer the case to prosecutors. The commission determined that Asiana's actions, which exceeded the fare increase limit since the first implementation point, directly violated the merger approval conditions.
On the 3rd, the commission announced that Asiana Airlines violated the 'prohibition on exceeding the average fare increase limit' among the corrective measures imposed during its merger with Korean Air. A commission official noted, "This measure was a key behavioral condition to prevent consumer harm from fare increases following the merger," adding, "Considering the breach since the first implementation point, we decided to refer the corporation to prosecution."
The commission determined that Asiana Airlines had violated corrective measures on four routes: ▲ Incheon to Barcelona (business class) ▲ Incheon to Frankfurt (business class) ▲ Incheon to Rome (business class and economy) ▲ Gwangju to Jeju (economy) during the first quarter of this year. The average fares on these routes were found to exceed the increase limit reflecting the inflation rate based on 2019 fares by at least 1.3% and up to 28.2%.
The fare increase limit is calculated by reflecting the consumer price index of the previous quarter on the '2019 quarterly average fare'. Routes subject to corrective measures cannot exceed this limit, and compliance will be monitored quarterly until structural measures are completed.
According to the commission, the merger of Korean Air and Asiana Airlines received final approval on Dec. 12, 2024, after being reported in November 2020, considering a review by foreign competition authorities and changes in the aviation market conditions. During this process, the commission imposed corrective measures on a total of five airlines, including the two companies and their affiliates (Jin Air, Air Busan, Air Seoul), for a period of 10 years (end of 2024 to end of 2034).
The corrective measures consist of 'structural measures' and 'behavioral measures' that open slots and transport rights on 26 international routes and 8 domestic routes to third airlines due to significant concerns about competition. Slots refer to the airport departure and arrival times assigned to airlines by aviation authorities, and transport rights pertain to the rights to operate in specific countries.
Behavioral measures are actions that restrict fares and service conditions until structural measures are completed. In addition to the prohibition on exceeding the average fare increase limit, it mandates a prohibition on reducing the number of seats supplied below 90% compared to 2019, banning unfavorable changes to mileage systems, and maintaining overall service quality, including providing free baggage. Asiana's fare increases fell under breaches of these behavioral corrective measures.
The commission explained that this sanction is the largest case of imposing fines for noncompliance with merger corrective measures in history. The 'fine enforcement system' is a means to secure the effectiveness of merger approval conditions and enforce compliance. Previously, the commission had also imposed fines for noncompliance with merger corrective measures on Kolon (2003, 160 million won) and Hyundai HCN Gyeongbuk Broadcasting (2017, 1.3 billion won).
The commission announced that Asiana has prepared follow-up measures to compensate consumer harm on the violated routes. Asiana plans to provide discount coupons to domestic passengers and E-vouchers that can be used for bookings equivalent to the excess increase in fares for international flights.
A commission official stated, "The compliance period for Korean Air and Asiana Airlines is 10 years and will be in effect until the end of 2034," adding, "The commission will closely monitor the implementation of the corrective measures going forward."