Korean regulators tag KE, Asiana for antitrust violations; KE faces ACCC cargo charge

Korean Airlines and Asiana Airlines will be subject to fines of KRW10.4 billion ($9.2 million) and KRW640 million respectively for engaging in anticompetitive practices to hurt smaller Korean carriers, South Korea's Fair Trade Commission announced yesterday.

The announcement came just days after the Australian Competition and Consumer Commission charged KE with air cargo price fixing.

The formal penalty notices to the airlines from FTC are still forthcoming, but it issued a statement to media in Seoul detailing antitrust violations by the carriers. According to JoonAng Daily, the agency charged that KE and Asiana improperly threatened to withhold peak-season tickets from travel agencies if the firms sold tickets on startup LCCs such as Jeju Air, Hansung Airlines and Yeongnam Air. KE, it said, improperly rebated "volume" tickets to travel agencies if KE sales made up more than 50% of a firm's total sales.

"As a result, low-cost carriers had great difficulty selling tickets for major international routes for Japan, Southeast Asia and Hawaii and domestic routes to Jeju," FTC stated. "The inability to sell airline tickets through travel agencies caused great difficulty in [the LCCs'] operations and made it hard for them to settle into the market. . .If they fail to safely settle in the market, new companies are likely to collapse."

Meanwhile, KE is facing an April 1 court date in Sydney for allegedly entering "into arrangements or understandings with other international air cargo carriers that had the purpose or effect of fixing the price of a fuel surcharge, a security surcharge and a customs fee that were applied to air cargo" between 2001 and 2006, ACCC said, adding that "the arrangements or understandings were reached in Korea, Indonesia and Hong Kong for surcharges applied to cargo originating in those countries and in Indonesia for a customs fee applied to cargo originating in that country."

It said it is "seeking declarations, injunctive relief, pecuniary penalties, and costs." KE is the 12th carrier charged by ACCC for air cargo price fixing (ATWOnline, Oct. 29, 2009).