FTC rejects Korean Air’s mileage integration plan

Hanjin Group Chairman Cho Won-tae speaks during a press conference at its headquarters in Seoul, March 11. Joint Press Corps

The nation’s antitrust watchdog rejected Korean Air’s proposed plan to integrate mileage points with Asiana Airlines Thursday, citing concerns that the proposal may harm the interest of Asiana’s customers.

Details for the mileage merger plan have not been disclosed, but the Fair Trade Commission (FTC) said the latest proposal by Korean Air needs to be “immediately revised and supplemented.”

The agenda was one of the hot potatoes for the high-profile merger of the two carriers. This is because Korean Air’s mileage points are typically valued higher in the market.

However, the flag carrier cannot apply the market value, as this will draw backlash from Asiana’s customers. There is also a strong possibility that the antitrust authority flatly denies such a move, citing the need to protect the rights of Asiana customers.

The general view is that mileage points from Korean Air and Asiana Airlines will be integrated at a 1-to-1 ratio, following in the footsteps of similar overseas cases. For instance, Delta Air Lines and Northwest Airlines integrated their mileage points with the same ratio when they merged in 2008.

The FTC underscored the importance of protecting the rights of Asiana’s customers during the mileage integration process with Korean Air.

“We cannot initiate a screening procedure for the latest proposal by Korean Air, as Asiana Airlines’ mileage usage areas will become more limited when compared with the past under the proposed plan,” an FTC official said.

“The FTC believes it is not the right time for us to make public the detailed mileage integration plan. We also consider accepting opinions from various interested parties and experts at some later time.”

Although the FTC’s decision comes as a surprise, Korean Air is expected to submit an updated mileage integration proposal in the near future.

However, it will take at least a few months for the FTC to complete its review and grant approval of the new proposal, as the issue closely affects the public’s interests.

“The rights and interests of customers of Korean Air and Asiana Airlines should be protected in a balanced manner,” the FTC official said.

In 2020, Korean Air announced its plan to take over cash-strapped Asiana, and it took some four years for the former to complete a legal procedure for the long-awaited acquisition. Korean Air plans to finish merging its corporate culture by October 2026, and launch a converged entity that will operate with an updated corporate identity.