"What will happen to my Asiana miles if the merger takes place?"

Korean Air and Asiana Airlines aircraft parked at the apron of Incheon International Airport.
[Image source=Yonhap News]

[Asia Economy Reporter Lee Chun-hee] # Due to the spread of the novel coronavirus infection (COVID-19), overseas travel is not possible, but Mr. A, who has been diligently accumulating Asiana Airlines mileage through credit cards hoping to someday take a 'free flight' with mileage, received surprising news. On the 16th, news came that Korean Air would acquire and merge (M&A) Asiana Airlines, causing anxiety about whether the Asiana Club mileage accumulated so far would disappear.

However, the possibility of mileage disappearing during the integration process between the two companies is low. Currently, Korean Air operates its mileage system under the name 'Skypass,' and Asiana Airlines under 'Asiana Club.' Such airline mileage is recognized as a liability in the accounting process of each airline and is a property right with a creditor-like nature held by members. Therefore, even if an acquisition and merger procedure between airlines takes place, the existing mileage is practically unlikely to be extinguished.

Moreover, since all parties involved in the M&A, including the Ministry of Land, Infrastructure and Transport (the competent authority), KDB Industrial Bank (the main creditor), and Korean Air, emphasize 'consumer benefits,' there is also a possibility that the mileage of both companies will be integrated on a one-to-one basis. Cho Won-tae, Chairman of Hanjin Group (CEO of Korean Air), emphasized in a statement that day, "We will enhance consumer benefits by expanding customer choices through rational management and provide safer air services." Kim Sang-do, Director of the Aviation Policy Office at the Ministry of Land, Infrastructure and Transport, also explained at a briefing that "mileage will be used together once integrated," and since Asiana Airlines' mileage usage options were limited causing inconvenience to consumers, it will become possible to use mileage at Korean Air's partners as well, which "is considered an increase in consumer benefits."

The 'SkyTeam' airline alliance, to which Korean Air belongs (left), and the 'Star Alliance' airline alliance, to which Asiana Airlines belongs (right).

However, there are areas where the scope of utilization of Asiana Club mileage is likely to be limited due to the merger. This concerns partnerships with foreign airlines. This is because each company has had different partnership relationships in the global aviation market.

Currently, Korean Air belongs to the 'SkyTeam' airline alliance, while Asiana Airlines belongs to the 'Star Alliance.' Each airline alliance promotes various partnership businesses such as codeshare, cross-mileage accumulation, and brand membership. SkyTeam's 'Sky Priority' is a representative example. Accordingly, Korean Air has partnerships with Delta Air Lines, Air France, KLM, etc., while Asiana Airlines has partnerships with Lufthansa, Air Canada, United Airlines, etc.

However, since Korean Air was one of the founding airlines that led the establishment of SkyTeam in 2000, it is highly likely that the alliance relationship will be reorganized during the merger process, with Asiana Airlines withdrawing from Star Alliance. In this case, mileage partnerships through the existing Star Alliance airline alliance are expected to disappear.