ANA users are baffled… It will become common practice to fly to the U.S. via Seoul! What Will Happen with the Birth of the Giant Airline “Korean Air

New Korean Air” to Surpass ANA and JAL’s Transport Capabilities

Korean Air and Asiana Airlines, the two major airlines in South Korea, will merge as early as the end of 2014 to form a new Korean Air. Asiana Airlines, the second largest airline, will be absorbed by Korean Air, the number one airline in terms of passengers, and Asiana Airlines will cease to exist. The combined transport capacity of the two airlines will surpass that of Japan’s ANA and JAL.

On the other hand, international passengers in Japan will also be affected to no small extent by this merger. In particular, the loss of Asiana Airlines, a long-time partner of ANA, will mean the loss of codeshare flights and award tickets, as well as the loss of preferential treatment as a “Star Alliance Gold” member. In addition, South Korea is expected to take a further lead in functioning as a hub from Asia to North America.

Korean Air and Asiana have many routes to Japan and have long had a competitive relationship.

Korean Air is the largest airline in South Korea (flagship carrier, FSC) and has a wide network of flights throughout the world, including Japan, Asia, Europe, the United States, and Africa. It is a member of the SkyTeam airline alliance.

Asiana Airlines, established in 1988, is the second largest FSC in South Korea after Korean Air, and operates both international and domestic flights, including many routes to Japan. Asiana Airlines is a member of the Star Alliance, the same airline alliance as ANA.

As of March 2013, Korean Air and Asiana Airlines are ranked 32nd and 50th, respectively, in ASK, which indicates airline transport capacity, by Cirium, a British airline information company, and together they are ranked 18th. Incidentally, ANA and JAL are ranked 21st and 33rd, respectively.

In South Korea, competition has intensified with the establishment of low-cost carriers (LCCs) one after another since around 2010. Asiana Airlines sold its headquarters building, but its debt was so large that its parent company, Geumho Asiana Group, announced the sale in 2007. In November ’20, after the official announcement of the business merger with Korean Air, Korean Air acquired 63.88% of Asiana Airlines’ shares last December, making it a subsidiary.

ANA users voice their grief that they cannot use their miles and cannot use the lounges.

The major airlines are members of the three major airline alliances in the world: Star Alliance, SkyTeam, and oneworld.

For example, if you are an ANA frequent flyer and fly Asiana Airlines, you can earn ANA miles if the fare is eligible for mileage credit. It was also possible to use ANA miles to obtain award tickets on Asiana Airlines, for example.

In addition, if you held an ANA Super Flyers Card (SFC) or Platinum or higher, you were granted Star Alliance Gold, the highest level in the Star Alliance, and received a variety of preferential treatment. For example, priority in boarding procedures and baggage claim, access to airline lounges, etc. This was also applicable to economy class and award tickets, which were not eligible for mileage accrual.

When Asiana Airlines is merged into Korean Air, it will be integrated into SkyTeam, of which Korean Air is a member, and will no longer be a member of Star Alliance. No Japanese airline is a member of SkyTeam.

JAL has a long-standing alliance with Korean Air, which includes code-share flights, mileage credit, and award ticket redemption. However, the conditions for earning miles are rather strict, such as purchasing Korean Air flights with a JAL flight number on JAL and only on Japan-Korea routes, and the points for the FLY ON program, which is an annual boarding record, cannot be earned. Furthermore, trying to buy Korean Air flights on JAL’s website is usually quite expensive.

ANA and JAL currently only fly to/from Tokyo on Japan-Korea routes. Otherwise, Korean Air or LCCs are the only options.

What is the impact of the merger on “freight rates”?　Concerns about only one major company

Many people are probably most concerned about “fares” after the merger. When the two companies merge, there will be only one FSC in Korea. Fares will generally remain high when there is only one carrier where there has been price competition until now.

However, on flights of 1.5 to 3 hours, such as Narita, Kansai, and Fukuoka to Seoul, LCCs, which charge for in-flight meals and other services, are not as inconvenient as medium- to long-haul flights. In the end, the price may settle at “a little more expensive than LCCs.

Korean Air and Asiana Airlines also fly to regional airports in Japan. Many Japanese travel from regional areas to Europe, the U.S., and other destinations via Seoul without using Haneda or Narita. At this point, it is unclear whether all existing Asiana flights will be switched to Korean Air’s service, as well as fares.

While talks of a merger between the two carriers continue, there is also talk of a reorganization of the existing LCCs in Korea. Korean Air has Jin Air and Asiana Airlines has Air Busan and Air Seoul. In addition, there are about 10 other LCCs, including JEJU AIR, T-way Airlines, Eastar Airlines, and Aero K. With a land area of about a quarter the size of Japan and a population of about half that of Japan, there is always talk of financial difficulties in the competition among the many LCCs.

Will “Korean Air + Delta” be the most powerful LCC to North America via Seoul?

When the new Korean Air is born, it will overtake Japan’s ANA and JAL in passenger capacity. But more than that, the merger could further increase their influence in Asia.

Korean Air has Seoul’s Incheon International Airport as its international hub. In recent years, Delta Air Lines of the U.S., also a SkyTeam member, has been strengthening its ties with Korean Air. Delta previously used Narita Airport as its base in Asia, but withdrew from the airport in March 2008, consolidating its Japan routes to Haneda Airport and relocating its base to Incheon Airport. It will also conduct a joint venture (JV) with Korean Air to coordinate flight schedules and fares on Pacific routes.

If airlines are going to tie up with other airlines, it is more user-friendly for passengers if they are in the same airline alliance. As mentioned above, in addition to benefits such as priority in baggage claim and mutual access to lounges, it is also easier to accrue miles.

United Airlines, American Airlines, and Delta Airlines are the top three airlines in the U.S. United Airlines is affiliated with ANA under Star Alliance, and American Airlines is affiliated with JAL under oneworld, making it easy to make connections in Japan. On the other hand, Delta has no Japanese airline that is a member of the same SkyTeam alliance, making it more inconvenient than its rivals to reach Haneda for domestic flights in Japan or to other cities in Asia.

For years, Japan’s Haneda and Narita airports in Tokyo and Narita have been competing with Seoul’s Incheon, Hong Kong, Singapore’s Changi, and Bangkok’s Suvarnabhumi in Thailand for the largest hub airports in Asia. When Korean Air merges Asiana Airlines, the merger will be the largest in Asia. Moreover, one carrier and one airport in Korea will certainly be more advantageous for both airlines and passengers than two carriers and two airports in Japan. There are reports that the two Japanese carriers are feeling threatened by the merger of these two Korean carriers, and their future response will be closely watched.