A legal basis enabling South Korean carriers to fulfill conditions for “transferring control of traffic rights” in the country will be in place. The conditions need to be met when the airlines negotiate with other countries’ competition authorities for a merger.
With this, Korean Air Lines Co. (Korean Air) under the ongoing process of a merger with Asiana Airlines, a major airline in South Korea, will be able to transfer control of four passenger jets to its compatriot T’way Air, allowing it to operate the European routes from Korea to Paris, Frankfurt, Rome, and Barcelona. This is to alleviate monopoly concerns claimed by European antitrust authorities regarding the proposed merger of South Korea’s two full-service carriers.
According to the Ministry of Land, Infrastructure, and Transport (MOLIT) on Mar. 24, the proposed amendment to the “Regulations on Allocation of Traffic Rights” was pre-announced on Mar. 18. The amendments will allow airlines to transfer control to alternative airlines in the event of a merger.
MOLIT clarified the rationale behind the amendments, stating that “Even when foreign regulators requested “transfer control of traffic rights to competitors” for routes with monopoly concerns, there hasn’t been a legal framework to do this in current domestic laws.”
Under the current regulations, there is no basis for domestic carriers to voluntarily surrender traffic rights. There is only a provision that if a company does not utilize the rights with a certain frequency, the authorities will take it back. The amendments will include “implementing corrective actions mandated by or negotiated with foreign competition authorities” as a valid reason for the rights returns.
The returned traffic rights will be redistributed based on deliberation and decisions made by the deliberative committee of air traffic. If the reason for the return becomes invalid due to a merger failure, the government redistributes them to their original owner under the amended rule.
Korean Air had decided to divest the four designated European passenger routes to its competitor and reported the measures to the European Commission. After looking into the measures, the commission conditionally approved the merger between the two full-fledged air carriers.
Organizations, associations, or individuals with opinions on the proposed amendment can submit their feedback either through the Public Participation Legislation Center’s website or by mail to MOLIT by April. 29.
