May 09, 2024

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[THE INVESTOR] The South Korean government said on Dec. 26 that it is reviewing whether to approve the proposed joint venture between Korean Air Lines and Delta Air Lines on trans-Pacific routes.

The Ministry of Land, Infrastructure and Transport is likely to allow the JV on the condition that the two carriers maintain the number seat supply even after merging some of the flight routes, according to industry watchers. 

Korean Air and Delta Air signed a memorandum of understanding in March to establish the JV to strengthen their competitiveness and improve customer service by collaborating on costs and revenues, schedules and flight networks. It marked the first time for a local carrier to set up a joint venture that goes beyond code sharing and other partial collaboration.

The Land Ministry is waiting for the Fair Trade Commission’s review on the possible impact of the JV on the local markets, since market competition falls under the commission’s jurisdiction. The ministry will issue the final approval. US authorities gave the green light to the companies’ plan last month.

At a Dec. 21 public hearing, Korean Air said the JV could help cut down on unnecessary competition with international airlines, saying that customers would actually get the benefit of accessing more flights. “This could also help Incheon Airport get the upper hand in competition against Chinese and Japanese international airports,” said Woo Ki-hong, vice president of Korean Air.

By Alex Lee and news wires (alexlee@heraldcorp.com)