Asiana looks to Mongolia route
The country’s anti-trust agency has ordered Korean Air, the largest flagship carrier, to stop colluding with Mongolian Airlines in what it sees as a scheme to prevent other carriers from flying the lucrative route between Korea with Mongolia.
The Fair Trade Commission (FTC) argues Korean Air, together with its Mongolian counterpart, have been exerting undue influence over the Mongolian government, pressuring it to allow only the two airlines to operate the Incheon-Ulan Bator route.
The flagship carrier has denied FTC’s allegation, saying whether the route is open to other carriers is up to the governments of the two nations.
The FTC said Monday that Korean Air has pressed the Mongolian government through “illicit means.’
Since the launch of flights between Incheon-Ulan Bator in 1999, only Korean Air and Mongolian Airlines have operated them.
The Korean government asked its Mongolian counterpart in 2005 to increase the number of flights by allowing other carriers to operate Incheon-Ulan Bator flights.
Mongolia has rejected the proposal.
Mongolian Airlines has six regular flights per week between Incheon and Ulan Bator, with Korean Air providing another six. During peak seasons, they also offer charter flights.
According to the anti-trust watchdog, the average seat occupancy ratio on Korean Air’s Incheon-Ulan Bator route stood at 94 percent in August 2011, compared with an average 84 percent on its other international routes.
The FTC also said it earned 29 percent of sales as net income from the route between 2005 and 2010 compared to 3 percent from its other international flights on average.
“People traveling between Korea and Mongolia paid much higher fares than those flying similar distances to Hong Kong and Guangzhou.
This shows Korean Air and Mongolian Airlines have been abusing their monopolistic status to maximize profits at the expense of air travelers,’’ the FTC official said.
The official also said Korean Air provided a wide range of favors to Mongolian government officials on many occasions, adding the company tried to derail aviation negotiations between the two governments to prevent its main rival Asiana Airlines from flying between the two countries.
Korean Air denies the claims.
“We never colluded with Mongolia’s flagship carrier nor conducted business in an inappropriate way,’’ a Korean Air spokesman said. “Whether to permit other carriers to operate the Incheon-Ulan Bator route is decided by the governments of both countries. We have no say in that matter.
“It is not our fault that the Korean government is unable to increase the number of flights. It does not make sense to claim inter-governmental negotiations are manipulated by a private company.’’