Three carriers accused of breaching 90% capacity obligation set at merger approval

FTC examiners recommend compulsory levy, corporate referral to prosecutors

Request to ease Guam route supply standard rejected

Korean Air, Jin Air and Asiana Airlines have been referred to the Korea Fair Trade Commission for allegedly violating a seat supply obligation on the Cheongju-Jeju route — a condition imposed when regulators approved the Korean Air-Asiana Airlines merger.

The latest alleged breach comes after Korean Air and Asiana Airlines were already sanctioned for the same violation on the Incheon-Frankfurt route.

Korean Air and Asiana Airlines aircraft taxi on the apron at Gimpo Airport. [Yonhap]
Korean Air and Asiana Airlines aircraft taxi on the apron at Gimpo Airport. [Yonhap]

The Fair Trade Commission said Wednesday it had submitted an examination report to its full committee and forwarded copies to the three airlines — Korean Air, Jin Air and Asiana Airlines — over suspected violations of merger remedies.

The examination report sets out the findings of the investigation, an assessment of whether the law was broken, and recommended sanctions. Delivery of the report to the respondents formally opens the adjudication process.

When the FTC approved the Korean Air-Asiana Airlines merger in December 2024, it imposed structural and behavioral remedies on 26 international routes and eight domestic routes where it found a risk of reduced competition.

The structural remedies require the carriers to transfer slots and traffic rights on those routes to other airlines. Slots refer to the departure and arrival times assigned to an airline by airport authorities, while traffic rights are the entitlements to operate services to a given country.

Until the structural remedies are completed, the FTC barred the airlines from reducing annual seat supply on the affected routes to below 90 percent of 2019 levels. Exceptions were permitted only in cases of force majeure or other unavoidable circumstances.

FTC examiners found, however, that the three carriers reduced seat supply on the Cheongju-to-Jeju and Jeju-to-Cheongju routes to below 90 percent of 2019 levels from December 2024 through December last year without any qualifying exception. Examiners recommended that the airlines be subject to a compulsory performance levy under the Fair Trade Act and that the corporations be referred to prosecutors.

Jeon Seong-bok, director general of the FTC's merger review bureau, said the carriers "were found to have reduced the number of flights," adding that the specific seat figures could not be disclosed because they constitute trade secrets of Korean Air.

Korean Air and Asiana Airlines had previously been fined a compulsory performance levy in December last year after investigators found they had cut seat supply below the required threshold on the Incheon-Frankfurt route between Dec. 12, 2024, and March 28 last year.

Separately, five carriers — Korean Air, Jin Air, Asiana Airlines, Air Busan and Air Seoul — asked the FTC to lower the seat supply threshold for the Incheon-Guam and Busan-Guam routes from 90 percent to 70 percent of 2019 levels, citing a drop in demand.

FTC examiners rejected the request, finding that the decline in demand did not constitute circumstances serious or unavoidable enough to warrant a change to the remedies. A separate examination report recommending that the five airlines' applications be dismissed was also submitted to the committee.

The airlines will now be able to exercise their right of defense — submitting written opinions, reviewing evidence and making oral statements. The FTC's full committee will deliberate on whether to impose sanctions for the Cheongju-Jeju seat reductions and at what level, and will also make a final ruling on whether to ease the supply threshold for the Guam routes.


y2k@heraldcorp.com