Jin Air asks government to remove all restrictions

Jin Air, the low-cost arm of Korean Air, has asked the government to lift sanctions restricting its business.

The budget airline said Tuesday that it submitted a report on Monday detailing the progress it has made in improving its corporate governance structure and culture to the Ministry of Land, Infrastructure and Transport while making the request.

The airline has been penalized by the Transport Ministry since August last year when Cho Hyun-min, the sister of Korean Air Chairman Cho Won-tae, was found to have been on the airline’s board of directors from 2010 to 2016. Under Korean aviation safety law, a foreign national cannot be registered as a board director of a Korean airline for security reasons. Cho Hyun-min is a U.S. citizen.

The airline had also been penalized for power abuse by Cho Hyun-min and the rest of the owner family. Last year, Cho Hyun-min was embroiled in a huge scandal after she threw fruit juice in a fit of rage during a meeting with an advertising agency.

The ministry decided not to strip Jin Air of its business license, a possible punishment for appointing a foreign board member, but instead banned the company from adding new flight routes or registering new planes until it corrected problems with selecting directors and made sure such power abuse does not happen again.

According to Jin Air, it has improved its corporate governance structure by having more outside directors on its board. It used to have a seven-member board with four internal directors, but the balance changed in March when two internal directors including late Hanjin Group Chairman Cho Yang-ho stepped down. The board now consists of five members, with three being outside directors.

The airline also said it newly established an office dedicated to legal affairs to avoid violating aviation and corporate governance laws and introduced a formal grievance settlement procedure.

All the changes the airline has made over the last year have been detailed in 17 different categories in the submitted report to the Land Ministry, the company said.

Jin Air said it has suffered greatly in business performance during the past year under government sanctions. Its net profit in the first half of this year plummeted 82 percent to 7.4 billion won ($6.2 million) from 41.3 billion won in the previous year.

While the government distributed new traffic rights to begin services connecting Seoul with China, Mongolia and Singapore this year, Jin Air was excluded from the bidding process. The airline claimed it was also unable to hire more employees as it cannot register new routes or airplanes.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]