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■ Korean Air acquires Asiana … What is the mileage
Korean Air 1 mile for KRW 1,500
1 mile per 1,000 won Asiana
Together, the two companies exceed 3 trillion in debt
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Large National Airline (FSC) Korean Air (003490)is Asiana Airlines (020560) Before consolidation, the focus is on the mileage consolidation ratio. That’s because Korean Air’s relatively high mileage value set by the market, including credit card companies, is higher than Asiana’s, and 1-to-1 integration is expected to be difficult. In addition, the withdrawal of Asiana Airlines from the Star Alliance is also being discussed and some customers are increasing the “maximum loss consumption” they use ahead of time, fearing that mileage will run out.
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According to the aviation industry on the 18th, Korean Air began work to form an acquisition team for a successful integration with Asiana Airlines. The acquisition promotion team plans to conduct internal discussions on physical integration, membership and mileage integration and future operational plans.
Previously, the government had recommended integrating Asiana Airlines’ customers to minimize losses. Kim Sang-do, head of the aviation policy department of the Ministry of Land, Infrastructure and Transport, said: “After the two companies are integrated, the mileage will be used together and the number of consumers will increase, the which will increase the convenience of consumers “.
But the reality may be different. Most credit card companies rate Korean Air miles higher than Asiana. Korean Air earns 1 mile per KRW 1,500, but Asiana Airlines earns 1 mile per KRW 1,000. This is why customer complaints inevitably increase when mileage is integrated into a one-to-one ratio.
Furthermore, one-to-one integration should place a heavy burden on Korean Air. Airline mileage is recognized as a kind of debt. Asiana Airlines and Korean Air held mileage debt of KRW 841.6 billion and KRW 2.4 trillion in the second quarter, respectively. When the two companies merge, Korean Air will have to accumulate over 3 trillion won in debt on mileage alone.
Additionally, the possibility of Asiana Airlines’ withdrawal from Star Alliance, an airline alliance after integration, is weighing and customers are showing class action. Asiana Airlines miles can be issued to airline tickets or upgraded seats within Star Alliance. However, customers are increasing the consumption of purchasing products at the Mileage Mall, predicting that travel abroad will be blocked not only due to the new coronavirus infection (Corona 19), but also the number of uses. An industry official said: “Before the mileage value goes down, customers are increasingly using food and drink rights, music and data usage rights like coffee.” Meanwhile, Korean Air and Asiana Airlines are planning to begin system integration work such as staff and mileage as early as this month. As the two airlines have used different systems so far, it is expected that it will take some time before the internal systems are fully integrated.
/ Reporter Park Si-jin [email protected]
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