The FTC said on the 30th of last month that it had sent an examiner's report on the application to modify corrective measures for the Incheon-Guam and Busan-Guam routes to Korean Air and others, and had begun deliberation procedures.
When it approved the merger of Korean Air and Asiana Airlines, the FTC last year imposed a condition requiring the carriers to maintain annual seat counts on each route at 90% or more of 2019 levels, before the COVID-19 pandemic.
But problems arose as travel demand for Guam plunged recently. Guam was once a popular honeymoon destination, but demand has dropped sharply amid deteriorating tourism infrastructure and a rising won-dollar exchange rate. With so few passengers, the airline industry has taken to calling Guam routes "lie-conomy" — economy seats where all the adjacent seats are empty, letting passengers lie down. In November last year, a 180-seat aircraft flying from Busan to Guam carried just three passengers and six airline employees.
Request to cut seat requirement to 70% dismissed
Against this backdrop, five airlines — Korean Air, Jin Air, Asiana Airlines, Air Busan and Air Seoul — asked that the seat-capacity maintenance requirement be lowered from 90% of 2019 levels to 70%. The FTC declined, saying it was difficult to conclude that circumstances had changed enough to warrant modifying the corrective measures.
"To justify a change in corrective measures, a new circumstance such as a natural disaster or external factor causing a sharp shift in demand must have occurred after Dec. 24, 2024, when the FTC finalized the measures," said Jeon Seong-bok, director general of the FTC's Business Combination Division. "The grounds Korean Air presented, such as the decline in Guam tourism demand, cannot be seen as having newly arisen after the measures were finalized."
Accordingly, the FTC examiner submitted a report to the commission recommending that the application to modify corrective measures on the Incheon-Guam and Busan-Guam routes be dismissed. The FTC will then decide, through a plenary session, whether to impose sanctions over the reduction in seat capacity and at what level, and whether to lower the seat-maintenance obligation.
