Gov’t ends exclusivity deal with KAL, Asiana

Home > Business > Industry

print dictionary print

Gov’t ends exclusivity deal with KAL, Asiana

The government is terminating a contract that obliged civil servants to use national flag carriers for their business trips for the first time in nearly four decades.

According to the Ministry of Strategy and Finance, the “government transportation request,” a contract that made it mandatory for civil servants to take the country’s two national flag carriers - Korean Air and Asiana Airlines - for official travels will be abolished this year. The government signed the contract with Korean Air in September 1980 and with Asiana Airlines in August 1990, according to the ministry.

Instead, the government will select a travel agency that will be delegated with purchasing tickets for civil servants for official trips. The contract with the airliners will officially be terminated in October this year. An official from the Finance Ministry explained that they decided not to end the contract immediately to give officials some time to use their air mileage.

“The travel agency system is already widely used by private companies, [governments of] advanced countries and international organizations,” explained an official from the Finance Ministry, which predicted that the decision will save as much as 8 billion won ($7.3 million). The Korean government has been criticized repeatedly in the past for wasting money by only using national carriers that charge higher fares than other airlines, including low-cost airlines.

The government kept the contract alive because officials were able to acquire seats more easily and fees were waived if they canceled or changed their travel plans. While the government stuck to the contract, the number of Korean airliners increased from one in 1980 to eight this year.

The decision comes in the wake of a power abuse scandal involving members of the family that owns Korean Air. A series of scandals erupted after Cho Hyun-min, the second daughter of Hanjin Group Chairman Cho Yang-ho, was accused of throwing water at an advertising agency employee during a meeting in March.

Local authorities have since summoned family members, including Cho Hyun-min and her mother Lee Myung-hee, on allegations ranging from power abuse to smuggling.

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)