Korean Air and Asiana Hit with $8.7 Million Fine for Merger Violations

SEOUL— Korean Air (KE) and Asiana Airlines (OZ) have been penalized 12.1 billion won (approximately US$8.7 million) by South Korea’s Fair Trade Commission (FTC) for failing to adhere to vital terms outlined in their government-sanctioned merger agreement.

This financial penalty marks the largest of its kind since 1991. The FTC’s investigation revealed that both airlines had raised their fares beyond the limits established during the merger’s conditional approval in December 2024, affecting routes from Incheon (ICN), Gwangju (KWJ), and Jeju (CJU).

Korean Air and Asiana’s Merger Violations

When the merger between Korean Air (KE) and Asiana Airlines (OZ) was approved, it came with strict stipulations aimed at promoting fair competition.

A key requirement was that neither airline could raise average ticket prices beyond inflation-adjusted levels from 2019. This was intended to stave off fare increases that could arise from reduced competition.

However, within just one year, both airlines initiated fare hikes on numerous routes. The FTC found that business-class ticket prices on the Incheon–Barcelona (ICN–BCN) and Incheon–Frankfurt (ICN–FRA) routes surged between 1.3% and 28.2% compared to 2019 levels.

Similar increases were noted for the Gwangju–Jeju (KWJ–CJU) economy route along with fares in both cabins on the Incheon–Rome (ICN–FCO) route.

The FTC highlighted that these adjustments directly contravened the regulatory orders placed during the merger’s approval, particularly the condition regarding adherence to inflation thresholds for ticket prices.

Additional Conditions and Compliance Measures

The merger also included various long-term obligations besides the price limits. Korean Air and Asiana were mandated to:

• Maintain seat availability through 2034
• Ensure service quality, including baggage allowances and seat spacing
• Transfer specific routes to competing airlines

These measures were introduced to mitigate the potential monopolistic effects of the merger and enhance consumer protection.

In June 2025, the FTC also halted Korean Air’s attempt to merge its mileage program with Asiana, citing insufficient clarity and options for existing loyalty program members. The commission instructed Korean Air to refine its proposal with detailed swap ratios and enhanced benefits prior to any resubmission.

Regulatory Impact and Airline Response

The FTC has underscored that this fine serves as a cautionary tale for other companies operating under similar conditional agreements.

The objective is to emphasize the significance of compliance in post-merger activities, especially when market power is at stake.

Korean Air and Asiana Airlines are actively working on a revised strategy to tackle the pricing and mileage issues highlighted by the regulator.