bobbybrown

EU just blocked AC-Air Transat merger. Wonder what it means to KE-OZ.

dinoscool3

Fingers Crossed, but I doubt it.

LAX

Aren't they both Canadian companies? Why does EU have a say in the merger?

LAX

jamar

The EU has a say in their ability to merge any EU-based entities they may have, assets they have in the EU (slots at slot-controlled airports, for instance), and to some degree their ability to operate flights to the EU. A KE/OZ merger could end up undone in a similar manner- if a potentially combined airline ends up having to cut down its EU flying, give up slots, etc, to a large enough degree then KE and to some degree the government might find the other gains not worth it.

Leo Seungwon Baek

any updates after this for KE or OZ?

Adam Smith

It means the EU competition authorities aren't letting airlines use COVID as a blank cheque to push through anti-competitive mergers. (Although the EU didn't actually block the AC-TS deal, just asked for concessions that AC didn't want to give)

To understand the EU's potential interest in the KE-OZ transaction, you should look at how the deal might impact consumers in the EU. The key is whether the transaction will “significantly reduce competition” in certain markets. The EU generally looks at markets for air travel being city pairs, e.g. someone wanting to travel from Paris to Seoul.

Where this transaction is most likely significantly reduce competition is likely on travel to ICN. Any routes where KE/OZ are the only options, and therefore a monopoly once the deal is done, are likely to get detailed scrutiny.
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For instance, KE and OZ both fly to VIE. OS doesn't fly the route. That would leave KE/OZ as the only non-stop option on that city pair after the merger.

If there's only one route like that, the EU may just wave the deal through. But if there are a bunch, they will likely do a deep dive.

That deep dive might show that 70% of the VIE-SEL traffic is already connecting somewhere - the ME3, or with LH, LX, JL, whoever, in which case the OZ/KE deal may not significantly reduce competition on that city pair. Or it might show that 90% of the traffic between those cities is on the non-stops, meaning this would be a pretty harmful transaction.

The main issue will likely be routes to/from ICN. While OZ/KE may collect some connecting traffic that passes through to other destinations in Asia, those customers will likely have many other one-stops.

If there are quite a few routes that are of concern, the EU may ask for remedies - e.g. giving up slots, as mentioned by @jamar, although other commitments are possible.

LAX

Thanks for clarification on the proposed AC-TS deal. While I understand (admittedly at a very basic level) the concern for potential monopoly in certain markets, if the struggling carrier ends up failing and liquidate, wouldn't the surviving carrier still have a monopoly then? In the case of potential KE-OZ deal, is it better for OZ to go into BK and let KE pick and choose what it wants (assuming BK in Korea is somewhat similar to US) or allow KE to pick up OZ as a whole and salvage what it can?

LAX

pentiumvi

Maybe the thinking is that there may be other buyers?

LAX

I think there were others interested, but none materialized.

LAX

navigator4309

Yes - but the monopoly wouldn't be as large, nor handed to them on a plate.

In this case, if the merger were refused and Asiana collapses, Korean could very well expand to take over even more market share and grow its monopoly, but it would have to do so organically.

Some carriers will collapse because of Covid, but allowing airlines to consolidate into even larger monopolies simply because of Covid will just make it even harder for future entrants to break into the market when it can recover.

LAX

I am no expert, but I believe failing/failed airlines can be acquired in piece-meal fashion. I am not advocating for the deal to go through, but not sure if there is a way for OZ to survive this.

LAX

jamar

I imagine the main route to OZ surviving as an independent entity is if the EU asks for conditions stringent enough for KE/OZ/government to be willing to go back and revisit the HDC offer. Or if they just let OZ collapse, that also lets HDC and possibly others enter the ring to separately buy pieces of OZ.

kevintyj

As many of the forum members pointed out OZ is being acquired / merged with KE within the 2024 timeframe. My OZ *G status is active until 2022 and have no issues with maintaining this status with OZ until 2024, I have frequent flights to Korea and use either OZ, TK or LH from BOS, JFK, or LAX (but mainly BOS). I also make frequent trips to PVG from ICN so OZ has been amazing for me the past 5 years. Now the question is when OZ (if it does even happen) gets acquired by KE and exit *A, would other *A offer status matching programs to OZ members (if so I will just keep using OZ, I can use up the miles next year). If not which FFP should I start recurring miles to? The issue I have is that I purchase my own flights so not all flights I've taken are with *A (to save money) but if I were to move to UA or TK I will have to start exclusively purchasing *A flight tickets (at higher costs). TK seems the most realistic but UA would be beneficial when flying domestic. I refuse to leave *A for any other alliance, especially if it means I would have to stick with KE (had bad experiences with them multiple times). If I have to transfer to a diff *A member I would much rather transfer ASAP and start recurring miles there. When I do transfer though would I still be able to get priority baggage and lounge access through OZ *G? I've been denied entry to LH lounge in BOS before when I presented my digital OZ card on my app even though I was on a *A flight with *G status (maybe it was domestic flight and that was the reason why but don't remember). Thanks in advance everyone

jfidler

I'm having similar thoughts. What I liked is the OZ accrual period for *G is 2 years instead of 1. Due to my (pre-covid) flying patterns, that was a lot easier to achieve than trying to do it all in one year. I think for me, TK would be the best option. As I read it, you have a big hurdle in the first year to qualify, then after that you can take up to 2 years to requalify (someone correct me if I'm wrong). Now if TK did a status match, that would make things even better. For now, I'm going to continue to earn on OZ until details of the merger become more clear.

It's just a pity that OZ's program is going away -- I was about 100k miles away from lifetime *G.

mikesaidyes

In the case of KE and OZ the merger has to be approved in essentially most major countries where they both fly because of "affecting local interests" HOWEVER it will generally pass no problem.