Jin Air, Forced Leave and Suspension of Medium- and Long-Haul Routes Due to COVID-19 and Business Deterioration

[Asia Economy Reporter Yoo In-ho] Jin Air, a low-cost carrier (LCC) that has been under government sanctions for 19 months, is reported to have recently submitted a self-rescue plan to the Ministry of Land, Infrastructure and Transport, which includes suspending medium- and long-haul routes and enforcing forced leave.

This is a desperate measure taken due to a sharp decline in passengers caused by prolonged government sanctions and the spread of the novel coronavirus disease (COVID-19), which has led to increased deficits.

According to industry sources on the 26th, Jin Air has decided to suspend operations of its medium- and long-haul aircraft, the B777, for three months from March to May. The company plans to decide whether to resume operations of this aircraft type later based on the situation, making it unlikely that medium- and long-haul routes will resume in the first half of the year.

Accordingly, the company will implement leave for B777 captains (flight crew) during the suspension period. However, to maintain the captains’ qualifications, they will undergo essential training and maintenance flights for 3 to 5 days each month. Jin Air is the only domestic LCC operating the B777, a medium- and long-haul aircraft. The B777 has more than twice the seating capacity and range compared to the B737-800, which is the main aircraft type for domestic LCCs.

Jin Air will also enforce partial forced leave for all B737 captains and cabin crew for three months from March to May. These crew members will take turns taking one month of leave each. During the leave period, only the basic salary will be paid.

Jin Air has completed explaining these self-rescue measures to the labor union and is reported to have recently submitted the plan to the Ministry of Land, Infrastructure and Transport.

The reason Jin Air has prepared such stringent self-rescue measures is that it has not received government support for the aviation industry due to the 19-month-long sanction of 'denial of new route approvals,' and it is facing a critical crisis due to the decline in passengers caused by the spread of COVID-19.

In fact, Jin Air’s business performance has plummeted due to deteriorating business conditions caused by the boycott of Japan and the Hong Kong situation, as well as the Ministry of Land, Infrastructure and Transport’s management sanctions that have continued for 1 year and 7 months. Last year, sales amounted to 910.2 billion KRW, down 9.9% from the previous year, and it recorded an operating loss of 49.1 billion KRW, turning to a deficit.

Previously, in August 2018, when controversy arose over the water cup abuse incident involving Cho Hyun-min, then Executive Vice President of Korean Air, and violations of the Aviation Act, the Ministry of Land, Infrastructure and Transport decided to impose sanctions on Jin Air, including restrictions on new route approvals, new aircraft registrations, and charter flight operation permits for a certain period.

Although the Ministry received a report from Jin Air last September containing measures to prevent recurrence of violations of aviation laws and to improve management culture, it maintains that it is still not the stage to discuss lifting regulations.