Korean Air, Mongolian Airlines Caught in Collusion
Korean Air has been caught by the Fair Trade Commission for obstructing rival Asiana Airlines from opening flights to Mongolia. "Korean Air and MIAT Mongolian Airlines have been caught persuading the Mongolian government through unfair practices to block rival Asiana Airlines from opening flights there," the Fair Trade Commission said on Monday.
The FTC said the moves constituted collusion and ordered the Korean carrier to halt the practice. Korean Air and MIAT have jointly operated the Incheon-Ulan Bator route since the two countries signed an aviation pact in 1991, with each carrier running six flights each per week.
"After agreeing to block the entry of the rival carrier, Korean Air and MIAT continued to exercise influence on the Mongolian government since October 2005," the FTC said. The FTC obtained an internal report by Korean Air containing an agreement with MIAT to make these efforts.
Korean Air invited Mongolian government officials on free tours to Korea every year. In 2010, it spent W16 million (US$1=W1,180) on travel expenses of 20 Mongolian officials visiting Jeju Island, the FTC said. As a result of the monopoly over the Incheon-Ulan Bator route, reservations were persistently overbooked, while tickets were relatively expensive, the FTC added.
Korean Air denies wrongdoing. "It is the right of both governments to control the number of flights. No airline can exercise its influence in talks by aviation authorities," the carrier said in a statement. "The average annual load factor of the Mongolian route is similar to other routes and the tickets are not overpriced."
The FTC normally fines companies caught colluding, but it merely ordered Korean Air to stop influence peddling with the Mongolian government, since there was no direct action by the Korean carrier to raise prices.
It remains to be seen whether Asiana will be able to launch flights to Mongolia now. The Ministry of Land, Transport and Maritime Affairs must hold another round of aviation talks with Mongolia, which in turn needs to give the green light.
englishnews@chosun.com / May 29, 2012 11:26 KST
The FTC said the moves constituted collusion and ordered the Korean carrier to halt the practice. Korean Air and MIAT have jointly operated the Incheon-Ulan Bator route since the two countries signed an aviation pact in 1991, with each carrier running six flights each per week.
"After agreeing to block the entry of the rival carrier, Korean Air and MIAT continued to exercise influence on the Mongolian government since October 2005," the FTC said. The FTC obtained an internal report by Korean Air containing an agreement with MIAT to make these efforts.
Korean Air invited Mongolian government officials on free tours to Korea every year. In 2010, it spent W16 million (US$1=W1,180) on travel expenses of 20 Mongolian officials visiting Jeju Island, the FTC said. As a result of the monopoly over the Incheon-Ulan Bator route, reservations were persistently overbooked, while tickets were relatively expensive, the FTC added.
Korean Air denies wrongdoing. "It is the right of both governments to control the number of flights. No airline can exercise its influence in talks by aviation authorities," the carrier said in a statement. "The average annual load factor of the Mongolian route is similar to other routes and the tickets are not overpriced."
The FTC normally fines companies caught colluding, but it merely ordered Korean Air to stop influence peddling with the Mongolian government, since there was no direct action by the Korean carrier to raise prices.
It remains to be seen whether Asiana will be able to launch flights to Mongolia now. The Ministry of Land, Transport and Maritime Affairs must hold another round of aviation talks with Mongolia, which in turn needs to give the green light.
englishnews@chosun.com / May 29, 2012 11:26 KST
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