A Leap to Cross Higher Skies1)
The merger of Korean Air and Asiana Airlines has affected the aviation industry. The aviation industry is largely divided into passenger and cargo sectors, and when combined with Asiana Airlines, Korean Air will become one of the world's top 10 airlines in both passenger and cargo. With the aim of strengthening global competitiveness in the aviation industry and securing a stable financial system, Korean Air had been pursuing a merger with Asiana Airlines since November 2020. Since the aviation industry operates flights not only domestically but also abroad, mergers and acquisitions require approval from 14 essential countries. Since getting conditional approval from the EU Commission in February, only approval from the US remains. During the EU;s conditional approval process, Korean Air also accepted a separate sale of Asiana Airlines' cargo division. This was a condition of concern that Korean Air's business combination would take up a large share of the aviation industry and Korean Air selected Air Incheon, a small airline, as the preferred bidder. However, since Air Incheon is a cargo airline with no long-distance experience and has a weaker potential for growth in the cargo sector than larger airlines, there are concerns that the actual sale of the cargo sector is intended to aid Korean Air's monopolization of the cargo sector after the business combination is over. These merger seems to be facing such a problem.
In response, on July 11, Korean Air's labor union and Asiana Airlines' pilots' labor union held a press conference to voice dissent for the merger. Han Ye-taek, senior vice chairman of Asiana Airlines' pilots' labor union, said, "A large-scale restructuring of manpower is expected during the merger process by transferring transportation rights and arranging redundant routes, which is likely to hinder the competitiveness of the Korean aviation industry in the global aviation market." In other words, they are concerned about the possibility of weakening their overall competitiveness due to internal changes that will occur in the process rather than having synergy. In addition to Korean Air's monopoly, there is growing anxiety about restructuring within Asiana Airlines due to the lack of concrete communication between Asiana's union and Korean Air on employment expectations. The Asiana pilots' labor union sent a letter to the EU Commission against the separate sale of the cargo sector to Air Incheon. Asiana Airlines' union suggests finding another third party or surviving independently, but even this is not easy. According to the semi-annual report published on the electronic disclosure system in 2023, Asiana Airlines' corporate debt ratio in the first half of the year was 1,741% and a business merger with Korean Air is necessary to avoid bankruptcy. It is expected that practical alternatives will be required to solve the problem of service quality deterioration and anxiety over restructuring due to a monopoly arising from the process of merging Korean Air and Asiana Airlines.
1) Je Gal-min, "Asiana Airlines' Union 'The Opposition to the Merger of the Outflow of the Government, the Succession of Employment Is Also Unclear.'", sisaweek, July 12, 2024
