Korean Air’s monopoly on UB-Incheon route criticized again amid high summer prices

Korean Air is under scrutiny once again after allegations of overcharging have come up again due to the high prices of airline tickets on the UB-Incheon route. According to Incheon International Airport`s exclusive route, Korean Air is receiving Ulaanbaatar air fare for three times higher price than a similar distance and flight time between Incheon and Hong Kong, reported Korea’s Digital Times.

Digital Times found that on Korean websites, the price of the round-trip ticket in June from Incheon to Ulaanbaatar as of May 15 starts at 955,500 KRW or around 880 USD. While the price of a roundtrip ticket to Hong Kong from Incheon is about 323,700 KRW or around 300 USD, about three times cheaper than that of Mongolia.

The Korean government and the industry cited "exclusive" flights as a background in which the price of a ticket is about three times the difference on similar streets.

"Unlike Hong Kong routes, Mongolia does not have to compete for price because it is an exclusive flight for Korean Air."

"The airline should not exceed the upper limit of the fare that is reported to the authorities,” an official from the Korean Ministry of Land, Transport and Tourism told Digital Times.

In 2012, the Korean Fair Trade Commission (FTC) concluded that Korean Air was illegally lobbying and colluding with Mongolia officials to maintain a monopoly on the route. The FTC report said the airline was obstructing rival Asian Airlines from opening flights to Mongolia.

The FTC ruling statement said Korean Air provided “a wide range of favors” to Mongolian government officials on many occasions to prevent its main rival Asiana Airlines from flying the route. The report showed that Korean Air sponsored children of Mongolian aviation officials studying at Korean universities and provided their families with free travel to Korea. It has covered medical fees needed for some officials with eye diseases to get surgical treatment at hospitals in Seoul.

The regulator presumes the company has bribed Mongolian aviation officials since 2005.

Due to their monopolistic actions, the route has long suffered from high fares and a lack of tickets especially in July and August.

A representative from Korean Air explained to Digital Times that, "The Mongolian route is focused on demand during the peak season (June to August), making it difficult to secure stable earnings throughout the year, and the airfare is expensive due to poor weather conditions," he said. "It`s not as high as the comparable freight rates of similar routes on a single carrier.

...Korean Air is receiving Ulaanbaatar air fare for three times higher price than a similar distance and flight time...