The nation’s antitrust watchdog said Monday that it would penalize Korean Air and MIAT Mongolian Airlines for peddling influence to monopolize the route connecting Incheon and Ulaanbaatar.

According to the Fair Trade Commission, the two flag carriers offered favors to Mongolian aviation authorities to prevent competitors, such as Asiana Airlines, from operating flight services since 2005.

Since a civil aviation agreement made in 1991, the flights between the two cities have been offered only by Korean Air and Mongolian Airlines.

Due to their monopolistic actions, the route has long suffered from high fares and a lack of tickets especially in July and August.

Over the past three years, the occupancy rate of all international routes here was 84 percent on average, while the figure for the Mongolian route was 91 percent in 2010 and 94 percent in 2011.

Compared with other same-distance areas such as Hong Kong and China’s Guangzhou, the ticket prices were also up to 30 percent more expensive.

Korea’s Land, Transport and Maritime Affairs Ministry continued talks to improve the situation, but the talks have been suspended since 2005 due to the opposition from the Mongolian government, the FTC said.

“With the new findings, we hope the stalled talks on the high fares and a lack of tickets resume so that the number of flights can increase,” said a FTC official.

Meanwhile, Korean Air denied allegations flatly, saying it has never colluded with Mongolian Airlines in an “unfair way.”

“The entry of a new player is decided by an agreement between the two governments. It’s inappropriate to say that related talks have failed due to carriers,” said a Korean Air official.

By Lee Ji-yoon (jylee@heraldcorp.com)