Government petitioned to resolve Seoul City-Korean Air disputes over airline-owned land

Seen is the Korean Air-owned 36,642-square-meter site in Songhyeon-dong in Jongno District, central Seoul. / Courtesy of Seoul Metropolitan Government

By Jun Ji-hye

Korean Air has submitted a petition to the Ministry of Land, Infrastructure and Transport, asking Minister Kim Hyun-mee to resolve disputes between the airline and the Seoul Metropolitan Government (SMG) over a vacant lot located in central Seoul which is owned by the airline.

The national flag carrier said Monday that the petition was submitted last Friday. The move was taken by Korean Air a day after the planned signing of an agreement between the airline and the city government, arbitrated by the Anti-Corruption and Civil Rights Commission (ACRC), was cancelled and postponed indefinitely after the city government asked for some of the wording in the agreement to be changed.

The agreement called on the SMG to purchase the airline-owned 36,642-square-meter site in Songhyeon-dong in Jongno District through the Korea Land and Housing Corp. (LH). Under this measure, LH would purchase the land and pay the airline. Then, the city government would give another city-owned property to LH in exchange for the Songhyeon-dong site. The SMG is planning to create a public park on the land located east of Gyeongbok Palace.

The agreement initially specified the timing of the sale and purchase contract, stating that Korean Air and LH would sign the contract by April 30 and LH would pay the carrier soon after. But the city government abruptly asked for this to be changed to “the two sides will sign the contract at the earliest possible time.”

Korean Air said the agreement that excludes the exact timing of the contract signing would lose its binding force, and would be to the disadvantage of the airline, which is striving to secure cash promptly amid worsening financial difficulties due to the COVID-19 pandemic.

“The sale of the Songhyeon-dong site is at the core of our self-rescue measures that need to be completed by next year. Thus, relevant procedures should proceed promptly,” a Korean Air official said. “We hope the ministry will suggest the right path for both sides.”

In its petition, Korean Air asked the land minister to advise the city government to carry out relevant proceedings to purchase the land within the period accepted by the air carrier. In the event that the city government cannot proceed in accordance with the agreement, the airline asked the minister to advise the SMG to withdraw its plan to create a public park there so the airline can sell its property to private companies.

The airline noted its petition was submitted in accordance with the Local Government Act that stipulates the land minister's authority to instruct, supervise and advise local governments.

In February, the national flag carrier announced a plan to sell its property in Songhyeon-dong, which has been vacant for about 20 years, to secure cash amid the pandemic.

But in May, the SMG announced a plan to create a public park there, putting the brakes on the airline's self-rescue efforts, which led the company to file a complaint with the ACRC in June.