Jun Ji-hye, a reporter at the finance desk of The Korea Times, focuses primarily on economic policy and government agencies, mainly covering the Ministry of Finance and Economy, the Ministry of Budget and Planning, the National Tax Service and the Korea Customs Service. She previously covered financial authorities, including the Financial Services Commission and the Financial Supervisory Service, and earlier worked on the political, city and business desks, reporting on a wide range of issues.
Customer anxiety rises about Korean Air's takeover of Asiana
Passenger planes of the country's top flag carrier Korean Air and No. 2 carrier Asiana Airlines are parked at Incheon International Airport, Tuesday, a day after Korean Air announced a decision to take over its smaller local rival. / Yonhap
By Jun Ji-hye
By Jun Ji-hye
Customers are raising concerns about the possible impact of Korean Air's planned takeover of its smaller local rival Asiana Airlines as, if completed, the acquisition will grant the national flag carrier a dominant market position here that could lead to a rise in prices.
Those who have used Asiana Airlines' membership reward program are also worried about the fate of their mileage points after the No. 2 carrier is acquired by Korean Air.
On Monday, Korean Air and its holding company Hanjin KAL announced they would acquire the cash-strapped Asiana with the help of the state-run Korea Development Bank (KDB). If successful, Korea will have one mega airline that dominates the country's aviation industry and ranks within the global top 10.
Given that the decision was made amid deepening financial difficulties in the aviation industry due to the prolonged COVID-19 pandemic, Korean Air is highly likely to adjust duplicate air routes between the two airlines and eliminate some that are losing money.
Many consumers are expressing concerns on online communities that Korean Air, which will hold a monopoly status, could increase ticket prices while adjusting the air routes.
“I think Korean Air will increase ticket prices gradually, and low-cost carriers (LCCs) could follow suit over the long term,” one Twitter user wrote.
Mindful of those concerns, the government stressed that customer benefits could be enhanced when air routes are adjusted. It also vowed to take appropriate measures to protect consumers.
“We will offer aid in human resources required to explore new air routes or operate additional planes on existing routes, rather than focusing on removing money-losing routes,” said Kim Sang-do who is in charge of aviation policies at the Ministry of Land, Infrastructure and Transport.
He noted there would be no sudden increase in ticket prices as Korean Air has to compete with foreign airlines and LCCs.
“An airline cannot arbitrarily raise ticket prices on international routes, as an international agreement on aviation has set the upper limit,” he said.
Korean Air Chairman Cho Won-tae also said, Wednesday, that there would be no compromise in customer convenience or airfare hikes.
For their part, Asiana Airlines' loyal customers are expressing concerns over the possibility that their mileage points could become invalid after the acquisition is completed.
With regard to these concerns, the transport ministry said membership reward programs that the two airlines have operated separately will be integrated after the takeover is completed.
“Asiana Airlines' loyal customers will be able to use Korean Air's relevant services,” Kim said.
But aviation industry officials said mileage points of the two air carriers would not be integrated at a one-to-one ratio, given that Korean Air's points have been valued higher in the market.
Another concern is centered on the possibility that Asiana Airlines could leave the Star Alliance, the world's largest global airline alliance, after it is absorbed by Korean Air, which is a Sky Team member.
Because of these issues, some online commentators are encouraging Asiana's loyal customers to use their mileage points at the earliest possible date, saying the acquisition will be to their disadvantage.