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Korean Air-Delta joint venture to get ‘conditional approval’

A transpacific joint venture between Korean Air and Delta Air Lines will be given conditional approval from the government and will launch within the first half of this year, sources said Thursday. 

Hanjing Group Chairman Cho Yang-ho (fourth from right) and Korean Air CEO Cho Won-tae (third from right) pose for a photo after signing a contract for partnership with Delta Air Lines CEO Ed Bastian (fourth from left) in Los Angeles on June 23, 2017. (Korean Air)
Hanjing Group Chairman Cho Yang-ho (fourth from right) and Korean Air CEO Cho Won-tae (third from right) pose for a photo after signing a contract for partnership with Delta Air Lines CEO Ed Bastian (fourth from left) in Los Angeles on June 23, 2017. (Korean Air)

According to the sources, the Ministry of Land, Infrastructure and Transport recently received conditional approval from the Fair Trade Commission over the establishment of the two air carriers’ joint venture.

The FTC reportedly voiced concern over the Korea-US joint venture’s monopoly of flight routes, but gave a positive view overall. 

The current Aviation Act stipulates that aircraft carriers can form a partnership -- such as a joint venture -- upon the ministry approval. Such approval, however, needs to be discussed with the FTC which reviews and controls the competition in the aviation business. 

The ministry refrained from confirming, saying that talks are currently underway. 

The establishment of joint ventures among air carriers is viewed as the highest level of aviation business partnership, beyond codeshare agreements that simply allow two or more airlines to share the same flight. Under the agreement, the two airlines share costs and revenues on flights. 

In March last year, Korean Air and Delta Air Lines signed a memorandum of understanding for the establishment of the joint venture. After applying for approval in July, they received approval from the US Department of Transportation in November.

According to the companies, the Korean Air-Delta joint venture will create a combined network serving more than 290 destinations in the Americas and more than 80 in Asia, providing customers of both airlines with more travel options. 

“Following the approval, the Korean Air-Delta joint venture will be able to provide both airlines with expanded offerings and alternatives to customers,” said a Korean Air official, adding that both sides are doing simulations of flight schedules and route adjustments. 

Under the agreement, customers will also benefit from enhanced flyer benefits from both Korean Air’s Skypass program and Delta’s SkyMiles, the company added. 

By Kim Da-sol (ddd@heraldcorp.com)
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