Korean Airlines acquires Asiana; potential JAL and ANA merger

Korean Airlines has announced their intended acquisition of their biggest competitor and Korea's second largest carrier Asiana Airlines.  The deal will be finalized in the second half of 2021, with Korean putting down $1.6 billion for Asiana, which has been bleeding through cash even pre-COVID-19 pandemic.  Korean Airlines will move from the 18th largest carrier in the world to #10 on the list.

Asiana business class will soon become Korean Airlines Prestige class

Both airlines have had their history of ongoing struggles pre-pandemic.  South Korea is a relatively small nation geographically, with a population of around 50 million.  It's difficult for the country's demographics to support two full service airlines, and that's not even factoring in the international competition from foreign and low-cost carriers.

A380s will probably be on the chopping block once the merger is complete

What to expect from the Korean and Asiana Airlines merger?

Significant consolidation of personnel and equipment is sure to occur after this merger is complete.  Korean Airlines' chairman has stated that maintaining job security of existing employees would be a top priority.  However, it has also been said that the combined airline would have a surplus of anywhere from 800 to 1,000 employees, so it remains to be seen how the airline would be able retain those jobs.

Korean has ten A380s and Asiana has six A380s, with both carriers also owning a number of B747, B777, and A330 widebody aircraft.  As the era of the jumbojet is coming to an end, one would suspect that many if not all the A380s and the B747s would be retired, with a number of B777s and A330s also being shelved.  Both carriers do operate fuel-efficient widebody A350s and B787s with more on order, so it's reasonable to expect that these two aircrafts would serve as the backbone of their international fleet.

Korean Airlines is a founding member of SkyTeam, and has a joint venture agreement with Delta.  Asiana, on the other hand, has been a long-time member of Star Alliance.  Since Korean Airlines will be the surviving brand after the merger, SkyTeam is likely to retain its founding member, whereas Star Alliance will likely lose its respective member.  If this holds true, Delta and SkyTeam will own the vast majority of the routes between the U.S. and South Korea.

JAL and ANA potential merger?

As Japan Airlines (JAL) and All Nippon Airways (ANA) are bleeding through money in the midst of the pandemic, the Japanese government is preparing to inject capital into both carriers.  Heizo Takenaka, who serves on the Prime Minister's Growth Strategy Council, has hinted that the carriers should become one.  Although one person's opinion may not be the initiation of a merger, the Keio University professor emeritus does carry substantial weight.  However, nothing has been proposed or announced, and it could be years before a merger is actually complete provided that this does go through.

Will ANA first class become JAL first class or vice versa?  I hope not...

I can understand how the Japanese government may not want to fund two different carriers when it can just be one.  However, with a population of 127 million, Japan does have the demographics and geography to support two full service airlines, both of which consistently rank amongst the top in the world.  In fact, the fierce competition between the two carriers has likely forced them to become the cream of the crop of carriers.

Let's hope that these two will not become one...

Personally, I would be sad if a merger between JAL and ANA ever went through.  Both airlines are phenomenal, and their competition and the service-oriented culture of Japan has made them amongst the best.  Having a choice is a win for the customer, and it also doesn't hurt to have more booking potential to Japan in terms of points and miles as the two carriers are in separate airline alliances.

Bottom line

The COVID-19 pandemic has definitely changed the airline industry's landscape.  A merger between Korean and Asiana Airlines actually wasn't that surprising considering how poorly both carriers have faired financially even pre-pandemic, and Korea's demographics may not warrant two full service airlines.  It would be sad to see JAL and ANA collapse into one carrier though, as both airlines have proven their value over history as two of the top carriers in the world.  Competition, particularly across airline alliances, is also great for the consumer, and increases the potential value of your points and miles.


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