by Korea JoongAng Daily
Korean Air employees wash the fuselage of a Boeing 777-300ER aircraft in front of the maintenance hangar in Incheon on April 24. [YONHAP]
A woman surnamed Min who lives in Gangseo District, western Seoul, is wondering how to use her airline miles as she plans her summer vacation.Min holds mileage points with both Korean Air and Asiana Airlines. She's unsure whether to use the relatively small number of Asiana miles for this vacation or save them for use after the two airlines merge.
“The miles are only enough for a round-trip ticket to Jeju Island, so it’s not much, but I’m not sure how Asiana’s mileage will be converted in the future,” she said.
Interest is growing in how mileage points will be integrated following the merger of Korean Air and Asiana Airlines. A mileage integration plan is expected to be unveiled soon. The Fair Trade Commission (FTC) required Korean Air to submit a plan within six months of the merger’s completion on Dec. 12, 2024. Korean Air is currently preparing to submit the plan to the FTC by June.
Will it be 1:1?
The biggest point of contention is the conversion ratio. Airline miles are generally divided into two types: flight miles earned by flying and partnership miles earned through affiliated credit cards, hotels, car rentals and the like.
Flight miles are calculated based on the direct distance between two cities, as determined by the International Air Transport Association, and the accrual rate can vary depending on factors like whether the ticket was discounted. While Korean Air and Asiana use slightly different accrual rates, industry insiders say the common standard of distance makes the conversion relatively straightforward.
A Korean Air flight takes off at Incheon International Airport in Incheon on July 4, 2022. [YONHAP] “Even though the tickets may not cost the same, these miles were still earned by customers purchasing flights, so a 1:1 conversion rate is reasonable,” said an airline industry insider.
The issue lies with partnership miles. Airlines have worked with credit card companies and other affiliates to let customers earn miles based on spending. Though rates vary by card, Korean Air typically gives one mile per 1,500 won ($1.08) spent, while Asiana offers one mile per 1,000 won. Because Korean Air miles have traditionally been considered more valuable, a 1:1 conversion could put Korean Air customers at a disadvantage.
On the flip side, if Asiana’s mileage is undervalued, customers may complain that the ratio is unfair. In a report published late last year, the National Assembly Research Service proposed a conversion ratio of 1:0.9 for Korean Air and Asiana Airlines, suggesting that it should reflect a reasonable balance based on international precedent, service disparities and the potential for expanded usage.
“We’re currently analyzing the value of mileage through an external consulting firm,” a Korean Air spokesperson said. “The integration plan is scheduled for submission within the first half of the year.” Once approved, the policy will be implemented after the launch of the merged airline.
An Asiana Airlines plane lifts off in front of Korean Air planes at Incheon International Airport on Nov. 29, 2024. [NEWS1] Similar cases have occurred overseas. When Delta Air Lines and Northwest Airlines merged in 2008, they converted miles at a 1:1 ratio. Last year, the U.S. Department of Transportation also required Alaska Airlines and Hawaiian Airlines to do the same as part of their merger process.
Airlines push for mileage spending
To minimize customer complaints and reduce deferred revenue — considered a liability in accounting — airlines are actively encouraging mileage spending. As of the first quarter this year, Korean Air’s deferred mileage revenue stood at 2.62 trillion won, while Asiana’s was 951.8 billion won.
Asiana Airlines will begin accepting reservations for mileage-only flights on both international and domestic routes starting at 9 a.m. on May 20. A total of ten flights — from Incheon to Los Angeles, New York and Honolulu — will be available in July, August and September, with all unsold seats open for mileage redemption.
This is the first time that Asiana has included its Hawaii route among mileage-only flights. For the Gimpo-Jeju route, the airline will offer six mileage-only flights per day from June 16 to 26, totaling 60 flights.
Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
Reference
Written by LEE SU-JEONG [kim.minyoung5@joongang.co.kr]
Provided by Korea JoongAng Daily
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