Korean Air and Asiana Fined for Market Dominance
Korean Air and Asiana Fined for Market Dominance
  • Kim Dae-yong
  • 승인 2010.03.16 10:58
  • 댓글 0
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KFTC fines two major airlines*

On March 10, the Korea Fair Trade Commission (KFTC) fined Korea's two largest airliners Korean Air and Asiana Airlines a total of KRW 11 billion for abusing their market dominance by preventing low-cost companies from selling cheap tickets through travel agencies.  Korean Air was hit with KRW 10.4 billion and rest of the fine went to Asiana Airlines.

According to the KFTC, Korean Air and Asiana Airlines violated its antitrust obligation when they attempted to hamper the entrance of other low-budgeted airline companies.  Furthermore, Korean Air received a higher fine because it implemented a "volume incentive". This enforced travel agents to stop using other airlines' services so that they can get cheap rebates, for example; Korean Air gives a portion of the ticket sales to travel agencies if the proportion of Korean Air tickets exceeded a certain amount of the total ticket sales.

However, although the airlines' anticompetitive practice may be true, the motivation of the KFTC is still questionable.  Some critics blame the KFTC for targeting only Korean companies when U.S. Department of Justice (DOJ) Antitrust Division is purposefully excluding its domestic companies in order to protect its own companies.  But, here, with knowing that Korean Air and Asiana Airlines had been penalized for more than US$350 million in the States since 2007, the KFTC's action appears to be more motivated by penalizing anyone with the given opportunities rather than protecting Korean companies or even the economy.

*Picture is provided by KFTC

 

 


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