[The fountain] Who’s the owner of the mileage?
JANG WON-SEOKThe author is a stock market news reporter at the JoongAng Ilbo.
Even when you buy a pound of pork belly at a local butcher shop, you get reward points — it’s the owner’s way of asking you to come back. Airline mileage played a major role in the reward system becoming a marketing tactic widely used in many industries.
In 1980, Western Airlines offered $50 coupons to passengers flying the Los Angeles-San Francisco route. Passengers would get the discount for flying again. In the following year, airlines around the world began offering similar programs.
Korean Air is under fire for its recent changes to the mileage program. The change is based on changing the redemption standard from “region” to “distance.” Currently, you use 20,000 miles for a one-way flight to any part of Southeast Asia, but in the new system, you would have to redeem 17,500 miles to fly to Da Nang, Vietnam, but 27,500 miles to fly to Bali, Indonesia. It will be a gain to go somewhere close and a loss to fly far, and Korean Air claims that most customers use their mileage for short-distance routes and would benefit more.
It’s exciting to accumulate miles, but they are not easy to redeem. First, there are no seats available. Mileage seats account for only 5 percent of all seats. You would have to compete to get a seat to popular destinations, such as New York, a year in advance. That means customers don’t use their mileage on short-distance flights just because they want to. Also, they would have to pay taxes on the hard-earned tickets. To fly to New York, you would be charged an additional 500,000 won ($383) after redeeming up to 70,000 miles.
The airline is implementing a complex payment system to pay a portion of the fare with mileage and is expanding where the points can be used. But complains remain. You would have to redeem as much as 36,000 miles to stay a weekend at a hotel the airliner operates in Jeju Island. That is equivalent to a one-way ticket to the United States.
That’s not all. A miniature A380 plane costs 8,000 miles, and 30 regular bottles of water cost 3,000 miles. How would you feel when you collected hard-earned miles and the butcher shop owner tells you to use the points to buy green onions and not meats?
Mileage is a liability in accounting, but the airline calls it “bonus tickets.” Something is very wrong here. So, the pressure on the land and transport minister to come up with a true improvement is reasonable. Korean Air argues that its redemption rate is lower than its competitors and its accumulation rate is higher.
It seems that the airliner still doesn’t understand how customers feel when they cannot properly use the mileage they earned. Korean Air is an unrivaled top airline in Korea. It won’t have any competitor if its merger with Asiana is completed. Real owners of the mileage are asking if Korean Air is really qualified to be No. 1.
with the Korea JoongAng Daily
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