Korean Air faces price-fixing probe

The antitrust regulator is investigating Korean Air and Mongolian Airlines for possible price fixing for their services between Incheon and Ulaanbaatar, sources said Wednesday.

Since October, the Fair Trade Commission has been looking into their ticket prices which are about 30 percent higher than those on routes of a similar distance, they said.

Only the two airliners have been running the service under exclusive licenses for the past 12 years.

Korean Air currently charges 628,100 won for a return ticket.

The FTC declined to comment.

Korean Air refuted the allegations, saying its pricing is well under the price cap set by the regulator.

“We have been the only local carrier to Ulaanbaatar only because the bilateral agreement between the Korean and Mongolian government dictates so. And the 628,100 won we charge stays the same throughout the peak season,” a Korean Air official said.

Price cap set by the market regulator is 1,071,000 won, which the local carrier charges for a one-year return ticket. The official said price changes between the two figures depend only on customer demand.

The watchdog is said to have made a visit to headquarters of Korean Air in Seoul to inquire about its pricing system.

The two governments in 1990 launched a bilateral agreement to license the two airliners for the Incheon-Ulaanbaatar route. The Korean government has been pushing to grant licenses to other carriers since 2005 to meet the growing demand, but such effort faced opposition from the Mongolian government on multiple occasions.

By Cynthia J. Kim (cynthiak@heraldcorp.com)