Why Korean Air, Asiana Airlines in rush to shed unused mileage points
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"Even after the merger gets the final nod by the US, the airlines will continue to operate as two separate brands for two years," a Korean Air official said. "After that, we plan to combine the two brands into Korean Air and discussions will be made on details, including mileage transfer."
"It would be impossible for most passengers to use all their mileage points sitting in Asiana within two years. This could cause significant consumer complaints," an industry official said on condition of anonymity. "Because the merger issue remains ongoing, related discussions have not yet gained the attention it needs."
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South Korea's top two airlines, Korean Air and Asiana Airlines, are recently ramping up efforts to encourage their passengers to use up their mileage in an apparent move to ease financial burdens ahead of their planned merger later this year.
Korean Air recently announced a strategic partnership with GS Retail, a local retailer operating GS25 convenience stores, to allow customers to use their Korean Air points at GS25 outlets. Asiana Airlines also plans to launch an online shopping site exclusively for mileage points use next month.
During the COVID-19 disruptions, many travelers were unable to redeem their mileage points, leading to an increase in the total amount of unused miles. Both airlines were also forced to extend the mileage expiration dates due to the global pandemic.
As a result, their unused mileage points have surged to a combined 3.5 trillion won ($2.6 billion) in recent years. According to the latest data released by the Financial Supervisory Service on Monday, Korean Air's deferred income, which reflects the accumulated points, stood at 2.52 trillion won as of June, up 15.2 percent from 2019 before the pandemic. During the same period, Asiana Airlines saw an almost 40 percent jump to 975.8 billion won.
With their unused mileage points piling up, their passengers are wary of any change in the value after the merger of the two airlines that is still waiting for approval from the US aviation authorities.
Both airlines denied immediate changes in their mileage management systems even after the merger, at least for another two years.
"Even after the merger gets the final nod by the US, the airlines will continue to operate as two separate brands for two years,” a Korean Air official said. “After that, we plan to combine the two brands into Korean Air and discussions will be made on details, including mileage transfer.”
The official added that the whole process should undergo a thorough review by relevant organizations, including the Fair Trade Commission and the Transport Ministry, to protect consumer rights.
But some critics anticipate inevitable dissatisfaction from both sides of consumers, as Korean Air's mileage is generally more costly compared to Asiana's.
“It would be impossible for most passengers to use all their mileage points sitting in Asiana within two years. This could cause significant consumer complaints,” an industry official said on condition of anonymity. “Because the merger issue remains ongoing, related discussions have not yet gained the attention it needs.”
By Kim Hae-yeon(hykim@heraldcorp.com)
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