Korean Air and Asiana Merger: What’s in Store for Your Mileage

Merger expected within the year… Interest in mileage policy↑

1:1 integration is likely to increase customer dissatisfaction from both companies

Competitive airlines launch aggressive marketing campaigns

With the merger of Korean Air and Asiana Airlines within the year becoming visible, consumers’ interest is focused on the post-merger mileage policy.

According to the aviation industry, the European Commission (EC) and the U.S. Department of Justice are expected to give final approval to the corporate combination of Korean Air and Asiana Airlines by mid-month at the latest. If the U.S. approval is completed, Korean Air will secure approval from all 14 mandatory reporting countries for the business combination, completing the merger about four years after the decision to acquire Asiana Airlines.

As the world’s 7th largest airline is expected to be launched after the merger, interest in the mileage integration policy between the two companies is also increasing. Once the business combination is confirmed, Korean Air must submit a mileage integration plan to the government within six months.

However, consumers’ dissatisfaction is being felt as it is predicted that it will be difficult to integrate 1:1 because the mileage policies of Korean Air and Asiana Airlines are different. In the market, each company usually evaluates the value of mileage differently. Korean Air’s mileage is valued at 15 won, and Asiana’s mileage is valued at 11 to 12 won. As the mileage values ​​of both companies are different, if they are integrated into equivalency, a backlash from Korean Air users is expected. If the ratio is adjusted, Asiana users are also likely to be dissatisfied.

In particular, there are voices among Asiana customers that there are not enough ways to use up mileage before the merger. As of the first half of this year, Asiana Airlines’ deferred revenue, which is mileage not used by customers, was calculated at 975.8 billion won. Users say that although they have accumulated close to 1 trillion won in mileage, there are so few mileage seats that it is virtually impossible to purchase them.

As consumer dissatisfaction is increasing, competing airlines are trying to target niche markets. Last year, Singapore Airlines joined forces with a domestic credit card company to offer unprecedented mileage to credit card subscribers and open the opportunity for status upgrade benefits. Japan Airlines (JAL) launched a marketing campaign that granted One World Sapphire status to those who purchased business class on the Gimpo-Haneda route.

Meanwhile, looking at past overseas merger cases, most mileages were integrated 1:1. Representative cases include the merger of Delta Air Lines and Northwest Airlines and the merger of United Airlines and Continental Airlines. When Air France and KLM merged, mileage was integrated 1:1. To date, it has been reported that the specific direction of the mileage policy following the merger of Korean Air and Asiana Airlines has not been determined.