Korean Air Integration Nears Completion, but Pilot Disputes and Governance Uncertainties Remain

Mileage, Reservation, and Flight Number Integration Accelerates
Countdown to Launch of Integrated Airline on December 17
Pilots' Union Applies for Labor Dispute Mediation and Holds Rallies
Only 0.42 Percentage Point Share Gap Between Cho’s

With only three months remaining until the launch of the merged airline between Korean Air and Asiana Airlines, the physical integration of the two companies is entering its final stages. Following the integration of reservation systems and flight numbers, the mileage integration plan has also been finalized, accelerating integration at the customer interface level. On the other hand, in the process of personnel integration, conflict over pilot promotion seniority has escalated to the brink of a strike.

According to the aviation industry on September 16, Korean Air will sequentially change Asiana Airlines' flight designator "OZ" to "KE" from November 2 to December 3. This change applies to existing Asiana Airlines customers with reservations and ticket purchases for departures after the launch date of the integrated airline on December 17. Existing reservation and ticket information will also be transferred to Korean Air.

Korean Air B747-8i Aircraft. Korean Air

The mileage integration plan also received final approval from the Korea Fair Trade Commission the previous day. Existing Asiana Airlines mileage will continue to be valid for 10 years after the integration and maintain the current deduction rules and expiration period. Miles earned from flying will be converted to Korean Air mileage at a 1:1 rate, while miles earned through partnerships will be converted at a 1:0.82 ratio. As a result, the main customer system integration tasks needed for the launch of the merged airline are now effectively in their final phase.

The real challenge, however, lies in unifying personnel. In particular, labor-management conflict continues over what standards should be used to integrate the seniority (ranking by length of service) of pilots from both companies.

Seniority is more than just an internal ranking—it essentially determines personnel standards for pilots, including captain promotion order, aircraft type assignment, and even salary and allowance based on rank. The two companies also had different requirements for hiring pilots with previous civil aviation experience: Korean Air has required around 1,000 hours of flight experience, while Asiana Airlines has required about 250 to 300 hours.

The Korean Air Pilots' Union is raising issues with the method for determining integrated seniority. According to the union, Korean Air's civilian career pilots go through training after joining and only receive an official employee number after 8 to 27 months. The union claims that the company originally said integrated seniority would be based on the date of joining, but later changed it to the date an official employee number was given, putting Korean Air pilots—who have longer training periods—at a disadvantage in the ranking.

The union maintains that since the collective agreement stipulates that the order of flight crew seniority must be decided through labor-management consensus, the integrated seniority must also be negotiated by both parties. In contrast, Korean Air insists that an objective integrated seniority ranking has been created by maintaining the existing internal relative rankings of both companies, arguing that seniority and captain promotion fall under the employer's exclusive personnel authority. The company also believes that, after the integration, promotion opportunities will increase, and over 90% of Korean Air pilots will actually be promoted more quickly.

Members of the Korean Air Pilots' Union are holding a rally on the afternoon of the 14th in front of Korean Air headquarters in Gangseo-gu, Seoul, protesting the unilateral determination of flight crew seniority. Photo by Yonhap News

The conflict has already moved into a dispute procedure. On September 7, the Korean Air Pilots' Union filed for labor dispute mediation with the Seoul Regional Labor Relations Commission, and the union has also passed a strike authorization vote among its members. If mediation is not reached, the union will have secured the procedural foundation required to legally initiate industrial action. Should a strike actually occur, it would be the first time in 10 years since 2016.

From September 14 to 20, the union is holding rallies at the company's headquarters, Incheon Airport, and near the residence of Hanjin Group Chairman Walter Cho, demanding the withdrawal of the company's integrated seniority plan. The Asiana Airlines Pilots' Union is also currently holding a member vote to review the company's proposal, with the result expected to be announced on September 17.

Even if the integrated airline launches as planned, issues remain regarding the ownership structure. Hanjin KAL—where Chairman Walter Cho and related parties hold a 20.57% stake and Hoban Group holds 20.15%—shows a difference in shareholding of only 0.42 percentage points between the two sides.

The future disposal of Industrial Bank of Korea's 10.58% stake in Hanjin KAL serves as a variable. Industrial Bank of Korea has stated that no decision has been made regarding the sale of its stake. However, after the integrated airline is launched in December, the bank's policy-driven investment purpose will enter its final stage, so discussions about the stake's sale are likely to become more active.

Japan Airlines (JAL) recently announced a strategic partnership with Korean Air and acquired Hanjin KAL stock. While some speculate this could be a friendly move towards Chairman Cho's side, the exact stake and acquisition amount have not been disclosed, nor has any agreement on voting rights been confirmed.

An airline industry source commented, "The issue is not simply the launch of the integrated airline but how stably the organizations of both companies are merged into one entity. Even after launch, challenges remain regarding organizational integration, synergy creation, and Hanjin KAL's governance. There are significant hurdles for the new airline to clear before it can truly take root."

This content was produced with the assistance of AI translation services.