Mileage decision completes administrative process for integrated Korean Air, one step closer to launch

'The government's final approval of the Korean Air mileage integration plan is significant as it completes the administrative procedures for the launch of 'Unified Korean Air,' scheduled for December 17. If remaining issues, such as reaching an agreement with the pilots' union on seniority matters, are smoothly resolved over the next three months, the creation of the world's 11th-largest 'mega carrier (ultra-large airline)' will become a reality approximately six years after the formalization of the integration work between Korean Air and Asiana Airlines.

'The derivation of this mileage integration plan was the 'last puzzle' required for approval of the two companies' business combination. Korean Air signed a contract to acquire 64% of Asiana Airlines shares in November 2020, and filed a report on the business combination with the Fair Trade Commission in January of the following year. Subsequently, the Korea Fair Trade Commission went through two deliberations and ultimately decided on corrective measures for conditional approval in 2024, with mileage integration being the final remaining matter among the detailed corrective measures.

'In fact, a significant portion of the mileage integration plan was already finalized last September. At that time, the Korea Fair Trade Commission released a provisional plan centered on maintaining Asiana Airlines' mileage for 10 years, setting the boarding mileage conversion ratio at 1 (Korean Air) to 1 (Asiana Airlines) (with partner miles at 1 to 0.82), and preserving elite membership status and benefits, and conducted public opinion solicitation. In December of the same year, the Korea Fair Trade Commission judged that the incentive for Korean Air to 'discover and provide mileage usage locations' could weaken during the deliberation process and requested improvements, leading to the final integration plan after nine months of deliberation.

'Maintaining Asiana Airlines' mileage for 10 years remains as announced last year. What has been added is a commitment to maintain the number of mileage purchase seats (bonus seats) higher than the combined performance of Korean Air and Asiana Airlines in 2024 over the next 10 years. In particular, the core element is to maintain supply above the peak period of bonus seat boarding performance in the past 10 years (2023) for long-haul and popular routes where mileage usage demand is concentrated, for a period of 10 years.

'The Korea Fair Trade Commission's judgment that formal expansion of mileage usage locations lacks significance has drawn positive evaluations for focusing on 'expansion of bonus seats,' which are actually the primary usage area for consumers, thereby inducing changes in Korean Air. However, it is pointed out as a limitation that neither the Korea Fair Trade Commission nor Korean Air disclosed the exact number of bonus seats to be maintained due to 'trade secrets,' making external verification of implementation impossible. Voices are being raised that systematic supply expansion by Korean Air over the next 10 years and thorough monitoring by the Korea Fair Trade Commission must inevitably accompany this.

'Although administrative procedures are complete, there are still unresolved issues to finalize the integration. This is because labor and management are in conflict over determining the seniority of pilots from Korean Air and Asiana Airlines. Pilot seniority serves as a standard affecting captain promotions, wages, allowances, and other factors. The union claims that the company unilaterally determined this and recently applied for labor dispute mediation.

'The pilots' union held a rally on the 14th in front of Korean Air's headquarters in Gangseo-gu, Seoul, and another near Gwanghwamun on the 15th, demanding a seniority decision based on labor-management agreement. In contrast, Korean Air argues that the pilots' union insists that Asiana Airlines-originating pilots must be promoted before others, and for this purpose, they demand that all existing experience and qualifications of Asiana Airlines pilots not be recognized. If no consensus is reached within the maximum 30-day mediation period, the union could acquire legal strike rights, raising concerns that this could become an obstacle to the launch of Unified Korean Air.