"Unfair Terms Not Reflecting Pandemic" Fair Trade Commission Orders Correction of Terms for Korean Air and Asiana Airlines

Fair Trade Commission Demands Correction of 8 Unfair Membership Terms from Two Airlines
"Unrelated to Controversy over Korean Air Mileage System Deterioration"

The Fair Trade Commission reviewed the membership terms and conditions of Korean Air and Asiana Airlines and ordered them to correct unfair terms. Representative examples include provisions that cause unused mileage to expire after the validity period, even during periods when it is difficult to use airline mileage.

On the 17th, Korean Air employees are cleaning the aircraft fuselage to welcome spring at the Korean Air maintenance hangar in Jung-gu, Incheon. Photo by Jinhyung Kang aymsdream@

On the 26th, the Fair Trade Commission ordered the two airlines to correct eight unfair membership terms. However, it explained that this action is unrelated to Korean Air's mileage system reform, which was controversial earlier this year. A Fair Trade Commission official stated, “We also reviewed the reform plan announced by Korean Air, but since the airline decided to suspend the reform plan, we did not initiate the review process.”

Previously, Korean Air had announced a major mileage reform that would increase deductions for existing routes to the Americas and Europe, which led to consumer complaints. Consequently, the Ministry of Land, Infrastructure and Transport, the competent authority, and the ruling party requested revisions to the reform plan, leading to the suspension of the original plan and the creation of a revised version.

The Fair Trade Commission has been reviewing the membership terms of Korean Air and Asiana Airlines since December 2018. This was in response to consumer complaints arising from mileage expiration after the introduction of mileage validity periods by major domestic airlines in 2008.

As a result of the review, the Fair Trade Commission found eight types of unfair terms and requested corrections, including provisions that set mileage validity periods without considering periods when normal use is difficult, provisions that unconditionally set a 12-month grace period when changing mileage deduction standards, provisions that only require prior notice without individual notification when changing bonus systems, and provisions that arbitrarily correct members' performance records.

In particular, the Commission saw the need to correct provisions that cause mileage to expire simply because the validity period has passed, even during periods when it is practically impossible to use mileage, such as during the COVID-19 pandemic. Through nine months of negotiations on corrective measures, the two airlines agreed to add a clause to their terms stating that “the mileage validity period can be extended if it is impossible or significantly restricted to use the mileage.”

Additionally, regarding the provision that limits the grace period for applying the previous system to 12 months without exception when changing the mileage deduction period, the Commission determined that cases where it is practically impossible to use mileage, such as during a pandemic, should be reflected. Accordingly, a clause was added to allow the application of the previous system for more than 12 months when mileage use is practically impossible.

The Fair Trade Commission stated, “These two provisions are scheduled to be implemented from June after the businesses submit corrective plans following the Commission's correction recommendation,” and added, “The remaining six provisions were voluntarily corrected by the businesses during the review process.”