Watchdog Approves Korean Air Takeover of Asiana

The Korea Fair Trade Commission on Tuesday finally gave the green light to Korean Air's takeover of ailing Asiana Airlines on condition that the flag carrier relinquishes certain routes.

The decision came about a year after Korean Air applied for approval.

The FTC cited monopoly concerns over 26 of the two flag carriers' 65 overlapping international routes -- five to North America, six to Europe, five to China, six to Southeast Asia, one to Japan and three to Oceania and other regions.

For instance, the two carriers' combined share of the overlapping routes to North America would be 78 to 100 percent. 

The FTC ordered Korean Air to relinquish some slots if any newcomer seeks to claim them over the next decade. Until then, Korean Air is obliged to limit airfare hikes and maintain the number of flights, quality of service and mileage terms.

Korean Air still needs authorization from Australia, China, EU, Japan, the U.K. and the U.S., but industry insiders believe they are likely to wave it through since the FTC's strictures are reasonably tough.

"Korean Air and Asiana combined still rank only 10th among airlines in the world, so there won't be too many problems in obtaining approval," one insider said.

But some analysts voiced concerns that some synergy effects from the takeover could be diminished by having to let profitable routes go.