SEOUL- Korean Air (KE), based in Seoul Incheon (ICN), has allocated approximately USD 520,000 for lobbying efforts in the United States (US) since the beginning of 2022.
This expenditure is part of the airline’s strategy to address the Department of Justice (DOJ) resistance regarding its proposed merger with Asiana Airlines (OZ).
Korean Air Lobbying US
Data gathered by Open Secrets, a US non-profit organization that monitors lobbying spending, and reported by the South Korean newspaper JoongAng Ilbo indicates that Korean Air spent USD400,000 on lobbyists in the calendar year 2022 and an additional USD120,000 in the first half of 2023.
The proposed merger, officially launched by Korean Air in late 2020, has an estimated value of KRW1.8 trillion won (USD1.34 billion). It’s worth noting that in 2019 and 2020, Open Secrets did not record any lobbying expenditures by Korean Air in the United States.
The merger necessitates approval from antitrust authorities in 14 different jurisdictions, with most granting approval relatively quickly.
However, as of 2022, several competition agencies, including those in China, Japan, the European Union, the United Kingdom, and the United States, had not yet provided their approval.
It was in 2022 that Korean Air began investing in lobbying efforts. While China and the United Kingdom have since approved the merger, albeit with certain conditions, the European Union, Japan, and the United States have yet to do so.
The Department of Justice (DOJ) in the United States, the entity responsible for approval, has indicated a reluctance to grant it.
The challenge for the Merger
Furthermore, concerns are raised about the merger’s purpose if Korean Air must make substantial concessions to secure approval.
In a revised proposal submitted to the European Commission, Korean Air has offered to give up specific routes, release slots at airports such as Rome Fiumicino, Frankfurt International, Paris CDG, and Barcelona El Prat, and divest Asiana’s profitable cargo division.
Some individuals, including certain stakeholders at Asiana, are beginning to question whether the costs associated with the merger will outweigh its benefits.
A spokesperson from the Asiana Airlines Pilots’ Union conveyed that “Route transportation rights are not just an asset for the airline but a national asset.”
They expressed concern that surrendering all of these rights for the sake of the merger would have a substantial negative impact on the national economy and the aviation industry as a whole, potentially diminishing Korea’s position in the global context.
The European Commission is anticipated to announce its decision regarding the merger no sooner than January 2024. This decision is expected to carry weight in the eventual determination by the Department of Justice (DOJ), which is not anticipated until after that date.
In the current year, the DOJ has blocked JetBlue Airways’ attempt to acquire Spirit Airlines and prevented the Northeast Alliance, a joint venture involving JetBlue and American Airlines.
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