Korean Air foresees a smooth process of receiving government approval for its joint venture with Delta, despite some concerns about the potential for anti-competition raised by smaller airlines in the US.
The airline said Wednesday that it officially applied for the Transport Ministry’s approval for the joint venture Tuesday, with similar documents filed with the Department of Transportation in the US the same day.
(Starting third from right) Korean Air President Cho Won-tae, Hanjin Group Chairman Cho Yang-ho, Delta Air Lines CEO Ed Bastian, and Delta Air Lines President of International Steve Sear commemorate the joint venture between the two airlines at the Wilshire Grand Center in Los Angeles, US on June 24(local time). (Korean Air)
The joint venture is an intensified form of cooperation between the two allied airlines, allowing the carriers to share profits and marketing and sales infrastructure in their trans-Pacific routes.
The alliance does not require additional approval from the US Department of Justice because the two airlines received anti-competition immunity from the Department of Transportation in 2002. However, in Korea, the Transport Ministry must sign off on additional cooperative measures activated by the joint venture.
Since this is the first joint venture of its kind in Korea, it is unclear how long the approval process at the Transport Ministry will take.
Some smaller airlines in the US, including Hawaiian Airlines and jetBlue, have expressed concerns about the standing immunity for the alliance, saying that the changes in the airline industry over the past 15 years warrants another review.
In November 2016, a joint venture between Qantas and American Airlines was denied based on concerns about harming competition.
However, Korean Air said that it does not foresee any issues with the joint venture, noting recent trends in the airline industry and the fact that trans-Pacific routes have high transfer rates.
“The Qantas-American joint venture targeted US-Australia routes, which have low transfer demand,” said a spokesperson for Korean Air. “On trans-Pacific routes, passengers have plenty of airline options to choose from when deciding how they wish to transfer to their final destination, meaning that our joint venture does not endanger competition.”
The US Department of Transportation has generally greenlighted joint ventures in the trans-Pacific area, including those between United and ANA, and American and Japan Airlines.
By Won Ho-jung (
hjwon@heraldcorp.com)
