Strong customer choice in the air cargo market is a key reason why the Singapore government approved the merger of Korean Air and Asiana Airlines. Previously, Korean Air recently announced that it achieved operating profit in the fourth quarter despite insignificant passenger flow due to record freight revenue.
Korean Air said on Tuesday that the Consumer and Competition Commission of Singapore determined that its acquisition of smaller domestic competitors would not harm consumers and businesses. The airline said it had received notice that due to high competition from competitors such as Singapore Airlines, the merger entity is unlikely to raise fares and will not reduce competition on cargo flights, as Singapore is the main transit station for many cargo flights, while Singapore Airlines provides a large number of cargo services
According to South Korean news media, the Federal Trade Commission is expected to give conditional approval of the merger soon if the two airlines waive the right to transport certain airport locations and certain areas.
So far, regulators in Türkiye, Taiwan, Vietnam, Thailand, Malaysia and the Philippines have approved Korean Air to acquire Asiana Airlines. The final agreement will require approval from the United States, the European Union, China, Japan, the United Kingdom and Australia.
In November 2020, Korean Air agreed to hold a controlling stake in Asiana Airlines. The deal was worth $1.5 billion at the time and would create the 10th largest airline by fleet size. Asiana Airlines has suffered particularly severe damage due to the widespread grounding of travel restrictions in many countries due to the COVID-19 travel restrictions. Korean Air plans to save money by simplifying routes and reducing maintenance costs.
Korean Air generated $2.2 billion in freight revenue in the fourth quarter, the best performance ever. Cargo sales accounted for 91.6% of the company's total revenue of $2.4 billion, which was incredible. Thanks to the cargo sector, the airline has hit record highs in both quarterly ($594.2 million) and annual ($1.2 billion) operating profits over a 53-year history.
According to the International Air Transport Association, Korean Air is the sixth largest cargo airline in terms of throughput. It has four Boeing 747-400s, seven 747-8s and 12 777 cargo planes.
The fleet has been running at full speed since the pandemic began, and the airline repurposed many grounded passenger aircraft for cargo operations to leverage its lower deck and cabin space and even remove seats from some aircraft to create more space for cargo. As of August last year, the company has operated more than 10,000 pure cargo passenger flights.
, which may be more critical to revenue growth compared to deployed assets, is the extremely high air freight rates due to high demand during the peak holiday season at the end of the year, disruptions in sea freight and a persistent shortage of airliner space.
