“We are transferring aircraft and crew along with four routes between Korea and Europe to T’way Air.”
This is the corrective action plan proposed by Korean Air to obtain approval for integration with Asiana Airlines from the European Union (EU) competition authorities. Asiana Airlines handed over its transportation rights to T’way Air, a low-cost carrier (LCC), on passenger routes between Korea and Europe (Frankfurt, Paris, Rome, and Barcelona), where EU competition authorities are concerned about monopolization, and lost aircraft, pilots, and crew members. They even decided to give it.
According to the aviation industry on the 6th, Korean Air plans to deliver the final corrective action plan containing these contents to the EU competition authorities at the end of October. Previously, the EU stated that it was concerned about restrictions on competition (monopoly) on the four European routes and all cargo routes between Korea and Europe.
Accordingly, Korean Air is said to be planning to send T’way Air an A330 airliner and pilots and flight attendants who can operate it. Currently, T’way Air operates three A330-300 aircraft. However, the three aircraft cannot operate all four major European routes operated by Asiana Airlines. Considering the range, the A330-300 is difficult to fly on the Korea-Paris route.
Korean Air plans to receive ‘conditional approval’ from the EU within January of this year, complete corrective measures by November of next year, and receive final integrated approval. However, until then, there is not enough time for T’way Air to introduce additional equipment and fill in pilots and flight attendants. Accordingly, it is analyzed that Korean Air attempted to allay concerns about limited competition by providing both aircraft and manpower.
However, this is a plan that could provoke opposition from Korean Air employees. This is because some of the Korean Air crew members have to go to T’way Air. A Korean Air captain said, “The mood of the A330 captains is somber. “I don’t know if it is a change in affiliation or a form of dispatch, but it is a matter of change in affiliation, so it is bound to be sensitive,” he said. “There is a difference in wages with T’way Air, and promotion and advancement issues are also issues.” “Chaos is inevitable, but it’s frustrating because employees can only watch the management’s decisions,” he said.
There is also a possibility of renting aircraft other than the A330 aircraft. Asiana Airlines deployed A350-900 and B777 on existing European routes. The A350 has 311 seats and the B777 has about 300 seats. However, the Korean Air A330-300 has 272 to 284 seats and the A330-200 has 218 seats. The number of seats on existing aircraft operated by Asiana Airlines is greater. Even if T’way Air receives the A330 series and operates it the same number of times as Asiana Airlines, the total number of seats supplied will be insufficient. The EU competition authorities’ position is that Asiana Airlines must maintain the same number of seats supplied. This is because fewer seats mean that airfares may rise. There is also an analysis in the industry that aircraft such as B787 (269 seats) or B777 (261 to 338 seats) can be sent to meet the supply of seats.
Korean Air plans to separate and sell Asiana Airlines’ cargo business to resolve concerns about monopoly in the cargo sector. The industry’s assessment is that this is no different from a de facto restructuring. This is because if the cargo business is sold, pilots are likely to move as well. Accordingly, the Asiana Airlines pilots’ labor union issued an official statement on the 26th of last month and stated that it opposes integration. The union said, “It appears that Korean Air is creating a monopoly system under the pretext of mergers and acquisitions. “Passenger fares will rise and cargo prices will soar,” he argued, adding, “If Asiana Airlines returns its slots and cargo and only takes over the shell, how will Asiana Airlines employees be maintained?”
An official from the Asiana Airlines union said, “It was a lie to say there would be no restructuring. “Let alone the synergy resulting from integration, a situation may arise where 1+1 is less than 1,” he said. “The purpose of integration has been completely altered.” “We need to fundamentally reexamine who integration is for and what it is for,” he said.
Reporter Byun Byeon-guk bjk@donga.com
2023-10-06 09:27:00
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