Korean Air Completes Asiana Acquisition: Everything You Need to Know

It’s official. One of the most drawn-out airline acquisitions in aviation history has concluded. On Thursday, Korean Air confirmed it has taken a majority stake in local rival Asiana Airlines. The flag carrier described the outcome as a “strategic milestone for Korea’s aviation industry.”

It’ll be many months before the full impact of the deal is realized, but be under no doubt – this is an airline mega-merger with global implications.

To help make sense of it all, we answer some of the most pressing questions about the transaction and the likely longer-term changes to the airline industry.

What’s the (Very Short) History of the Deal?

Thursday’s developments are four years in the making. In November 2020, at the peak of the Covid-19 crisis, Korean Air said it wanted to acquire a controlling stake in Asiana.

At the time, the $1.6 billion deal was framed not only as a response to the challenges of the pandemic but also as a solution to more systemic issues in South Korea’s aviation industry. The formal application process to global regulators started in January 2021.

What’s Taken so Long?

Airline mergers and acquisitions are rarely straightforward – just ask JetBlue – however even by industry standards, the Korean tie-up has been prolonged. Aside from complications of the pandemic, a major obstacle has been winning the approval of 14 different global regulators.

Türkiye was the first to approve the merger in early 2021, followed by Taiwan, Thailand, The Philippines, Malaysia, and Vietnam later that year.

Nods from South Korea, Singapore, Australia, and China came in 2022, while the U.K. said yes last year. Japan and the European Union followed suit earlier in 2024, leaving just the United States.

Regulatory watchdogs in several markets demanded that Korean Air and Asiana make concessions to promote stronger competition. For example, officials in the U.K. said Virgin Atlantic should be allowed to start a London-Seoul service as a condition of approval, while Japan requested changes be made on relevant routes to and from South Korea. This back-and-forth slowed down the overall progress of the transaction.

Okay, It’s Finally Done. How Long Will It Take to Merge the Companies?

Korean Air said on Thursday that it “plans to complete the integration” with Asiana Airlines within two years.

Key elements of the project include what it describes as “network optimization.” Put simply, this will identify routes where both companies have overlapping services and ensure they are operating as efficiently as possible. It could mean changes in overall frequency to some destinations, while others may see a change in the type of aircraft flown.

There is also a high likelihood of new destinations being added, with previously unserved European and Latin American destinations reportedly under consideration. Significantly, South Korea’s Fair Trade Commission earlier ruled that the new combined business must maintain at least 90% of the total available seats in 2019. This should dampen fears of dramatic cuts that could damage supply and demand economics.

Is this the End of the Asiana Brand?

Not yet, but it is almost certainly the beginning of the end. The more dominant Korean Air brand will remain and Asiana’s corporate identity is going to be phased out as the acquisition process concludes.

It is also expected that various low-cost subsidiaries operated by the two companies will be streamlined under the Jin Air brand. The combined business will create the tenth largest airline globally by fleet size.

Will the Merger Result in Redundancies?

In a statement shared on Thursday, Korean Air insisted that “the integration will proceed without workforce restructuring.” However, as the deal beds in, it is likely that more strategic organizational changes will take place.

While no two corporate mergers are the same, history tells us that duplicative roles are often at threat as a single unified company structure is established. For its part, Korean Air suggests that any staff in this position will be redeployed within the new company.

“The combined organization projects natural staff growth through business expansion, with employees in overlapping functions being reassigned within the organization,” the statement added.

What About Frequent Flyer Programs?

Korean Air is a founding member of SkyTeam, while Asiana belongs to rival Star Alliance. The deal will ultimately see Asiana’s assets absorbed into Korean Air and Asiana surrender its current alliance membership.

Korean Air says that the integrated frequent flyer framework will be submitted to the Korea Fair Trade Commission by June 2025. It notes that “program details will be communicated to customers following regulatory review.” This is likely to include further detail on important elements such as the transferring of points and status from the old Asiana program. Until this time, it is business as usual for the existing loyalty schemes.

How Might this Impact U.S. Travelers?

This departure of Asiana from Star Alliance leaves remaining carriers – including, but not limited to United Airlines – in a weaker position due to reduced connectivity and partnership options.

Conversely, it further strengthens Delta Air Lines’ position on transpacific routes. In 2018, Korean Air and Delta signed a powerful joint venture agreement that reaches far beyond regular SkyTeam partnership terms.

Fueled by the operating synergies, Skift analysis of Cirium Diio data shows the two airlines operate an average of 19 flights a day between Seoul’s Incheon Airport and the United States. Asiana operates a further five or six, including an ultra long-haul route between Seoul and New York. It remains to be seen how many of these overlapping frequencies will be retained in the post-merger business.

Among the other major U.S. carriers, United flies to South Korea just twice a day – both services from its San Francisco hub – while American Airlines operates a single daily link from Dallas Fort-Worth to Seoul. Niche Korean player Air Premia is the only other scheduled operator between Seoul and the contiguous United States.

What are the Key Financial Elements of the Deal?

On December 12, Korean Air acquired 131,578,947 newly issued shares in Asiana Airlines. This represents a 63.88% ownership stake and makes Asiana Airlines a subsidiary of Korean Air.

The completion follows Korean Air’s payment of KRW 800 billion ($559 million) to Asiana Airlines on December 11, in effect concluding the share purchase. This brought the total investment through the third-party capital increase to KRW 1.5 trillion. Notably, this includes a previously paid deposit of KRW 300 billion and an interim payment of KRW 400 billion.

What are the Next Steps?

Asiana Airlines is due to hold an extraordinary general meeting of shareholders on January 16 to appoint new board directors nominated by Korean Air.

For its part, Korean Air says it will proceed to implement measures to “strengthen national aviation industry competitiveness, enhance [Seoul] Incheon Airport’s hub capabilities and expand global network reach.”

Expect key stakeholders, including South Korea’s Fair Trade Commission and international competitors, to monitor developments in the coming months very closely.