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Asiana to Become Subsidiary of Korean Air… Mileage Integration in Two Years

2024-11-29 (금) 09:47:49
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▶ 1:1 Mileage Conversion Under Debate

▶ Approval from Korea’s FTC Still Required

Asiana to Become Subsidiary of Korean Air… Mileage Integration in Two Years
The four-year-long merger process between Korean Air and Asiana Airlines has essentially concluded with the European Commission’s (EC) final approval on November 28. Attention now turns to the remaining steps leading to the full integration of the two airlines. Korean Air plans to complete the corporate merger next month, incorporating Asiana Airlines as a subsidiary. Afterward, the airlines will operate independently for two years, during which the focus will shift to operational and structural integration, including the unification of mileage programs.

The low-cost carriers (LCCs) under Korean Air and Asiana—Jin Air, Air Busan, and Air Seoul—will also merge, creating a "mega LCC" that is expected to significantly reshape the aviation industry landscape.

With the EC’s final approval, Korean Air has now received consent from 13 of the 14 key jurisdictions requiring mandatory merger filings, leaving only the United States. The U.S. Department of Justice (DOJ), which has been closely monitoring the EC’s review, is expected to conclude its assessment soon, effectively granting approval unless it files an antitrust lawsuit. Unlike other competition authorities, the DOJ does not formally announce merger approvals; it only signals disapproval by filing legal action.


To address antitrust concerns raised during the approval process, Korean Air supported Air Premia, a domestic LCC, in operating as a substitute carrier on five key U.S. routes previously dominated by Asiana: New York, Los Angeles, Seattle, San Francisco, and Honolulu. Korean Air also mitigated cargo business concerns by selling Asiana’s cargo division to Air Incheon.

Korean Air plans to finalize the acquisition by purchasing new shares issued by Asiana before December 20, paying the remaining KRW 800 billion of the KRW 1.5 trillion acquisition cost. This will grant Korean Air a 63.88% stake in Asiana, officially making it a subsidiary.

For the following two years, Asiana will operate independently while Korean Air works on integrating operations. A key focus during this period will be unifying the two airlines’ mileage programs. According to the Korea Fair Trade Commission’s (KFTC) corrective measures, Korean Air must submit a plan for mileage integration within six months of the merger and obtain the KFTC’s approval.

The unified mileage program is expected to take effect two years later, once Asiana is fully absorbed into Korean Air. Until then, customers can continue using their existing mileage programs separately. While the exact conversion rate has yet to be determined, many believe a 1:1 exchange is unlikely due to the higher valuation of Korean Air’s mileage program. Korean Air has stated, “We understand the importance of establishing a fair and reasonable conversion rate for customers and will work closely with professional consulting firms to finalize the terms.”

The integration of the two airlines’ alliances will also require careful negotiation. Korean Air is part of SkyTeam, which includes Delta Air Lines, AeroMexico, Air France, and China Airlines, while Asiana is a member of Star Alliance, which includes Lufthansa, United Airlines, Air Canada, and Thai Airways. Resolving these differences will be a crucial step in the merger process.

[Yonhap News Agency]

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