Korean Air Selects Air Incheon for Asiana Cargo Sale

DALLAS — Korean Air (KE) selects Air Incheon (KJ) as the preferred bidder for Asiana Airlines’ (OZ) cargo business, part of KE's protracted acquisition of OZ.

The South Korean flag carrier and largest carrier in the country first announced its plan to acquire OZ in November 2020, but the proceedings were delayed amid the fallout of the COVID-19 pandemic.

Once the industry got the wind back under its wings, in March 2023, the UK’s Competition and Markets Authority (CMA) approved the merger. However, the CMA was unhappy with the proposed tie-up, questioning the combined carriers’ monopoly on the Seoul-London route—at the time, OZ and KE were the only two airlines flying between Seoul Incheon Airport (ICN) and London Heathrow Airport (LHR).

Korean Air gave the CMA “appropriate” remedies to this issue, including a new framework to offer slots allowing competitors to access the route. at the end of Q1 2023, the proposed acquisition had been given the go-ahead by 11 countries but had yet to be approved by the EU, the U.S. and Japanese competition authorities.

Specifically, the European Commission raised concerns that the takeover would reduce competition between Europe and South Korea due to the two carriers dominating the long-haul market to and from South Korea.

Deadline, Bidding Airlines

To secure regulatory approval from Brussels, KE offered to sell OZ's cargo business in October 2023. Two months later, European Union competition regulators set a February 2024 deadline to review KE's proposed acquisition of OZ after the two airlines resubmitted their plans to EU antitrust regulators.

In April, South Korean carriers Eastar Jet (ZE), Air Premia (YP), and Air Incheon (KJ), submitted bids to acquire OZ's cargo business. Today, KE's board of directors selected KJ as the primary candidate. via a press release, KE stated that its decision was "based on several key criteria: the certainty of completing the transaction, the ability to maintain and enhance long-term competitiveness of the air cargo business, and the capability to mobilize funds through a competent consortium."

The sale of OZ's cargo business, estimated at US$219-$364 million, according to an Air Cargo News, is essential for KE to secure regulatory approval for its acquisition of OZ. Korean Air plans to sign a framework agreement with KJ in July, pending contract conditions. This agreement is subject to review by the European Commission.

Founded in 2012 and based at ICN, KJ is the Republic of Korea's only all-cargo airline. While KJ primarily operates in Asia, Air cargo News states it is expected to strengthen its competitiveness by leveraging OZ's long-haul network to the Americas and Europe and its fleet of larger cargo aircraft.