Mileage worries gain altitude amid Korean Air, Asiana merger

Korean Air and Asiana Airlines' mileage cards [JOONGANG PHOTO]

President Yoon Suk Yeol's recent assurances against any loss of mileage as a result of a merger between Korean Air and Asiana Airlines has reignited a hot debate surrounding the consolidation of the mileage programs of the country's two largest airlines.

The debate centers on how and when customers' accumulated mileage will be converted amid the potential merger, expected to conclude by the year's end pending regulatory approval by the United States and the transfer of some European routes and sale of Asiana's cargo business.

"We're well aware of the worries of the people who fear that once the two companies merge into one giant airline, their accumulated mileage might be deducted or fares might rise," President Yoon said during a town hall meeting last Thursday. "We'll make sure that no one suffers any loss in mileage benefits, not even a single mile, when it comes to air travel."

Such remarks sparked interest in the potential transition of Asiana mileage to Korean Air at a 1:1 ratio.

Challenges loom, however, including potential dissatisfaction among Korean Air customers over financial implications as their mileage tends to be more costly to earn than Asiana's.

Using the Shinhan Card linked with Asiana, customers can earn 1.5 miles for every 1,000 won (0.76 cents) spent, with an annual fee ranging from 43,000 to 45,000 won. In contrast, the equivalent card affiliated with Korean Air carries a higher annual fee, ranging from 49,000 to 51,000 won, and earns just 1 mile for every 1,000 won spent.

Hotels.com, a booking platform for lodging, provides 1 mile for Korean Air and 3 miles for Asiana per dollar spent. Lotte Rent-a-Car rewards 100 miles for Korean Air and 200 miles for Asiana based on a 24-hour period.

This discrepancy raises concerns about the potential financial implications for Korean Air if Asiana's mileage were converted to Korean Air's at a 1:1 ratio during the merger. Asiana's unused mileage, described as "accrued revenue," totals 950 billion won as of the third quarter of 2023 — which could translate into additional debt for Korean Air.

Yet calculation methodologies for the cash valuation of each mile remain ambiguous as only redemption values based on specific flight routes are disclosed. For instance, while buying a round-trip Prestige Class ticket using Korean Air miles, each mile holds a value of approximately 30 won for the Incheon-Singapore route, compared to 55 won for the Incheon-New York route.

"We will actively comply with the government's policy of implementing measures to safeguard consumers from any drawbacks," Korean Air said, refraining from giving out detailed plans over the mileage program.

Experts warn of potential customer complaints, highlighting the need for careful consideration amid the merger process.

Because the merger isn't driven by customer demand, any drawbacks perceived by consumers regarding mileage, which they see as assets, could lead to active expressions of dissatisfaction toward both the government and the companies involved," said Lee Eun-hee, an honorary professor of consumer science at Inha University. "Given the president's proactive declaration of a 'no disadvantages' policy, Korean Air is likely to bear a significant portion of the burden from public opinion regarding future mileage revisions."

BY CHOI SUN-WOOK [seo.jieun1@joongang.co.kr]