Korean Air will adjust the mileage conversion rate for Naver Pay points (Npay points). Since the merger with Asiana Airlines was decided, Korean Air has been tightening the requirements for earning and converting miles across various partners. With mileage, which is recorded as a liability, not being redeemed as expected while the Korea Fair Trade Commission is pressing the carrier to expand ways to use miles, some say the airline is responding by cutting back on the accrual of miles itself.
According to the airline industry on the 30th, Korean Air will change the conversion of miles through Npay points starting Feb. 1 next year from the current 1 mile per 22 points to 1 mile per 25 points. It effectively raises the price of miles by 13.6%. Based on Npay points' default accrual rate (1% of the payment amount), the amount a consumer needs to spend to earn 1 mile rises from 2,200 won to 2,500 won.
In Nov., Korean Air raised the threshold for earning miles by changing the requirements of its mileage-earning partnership with the global luxury outlet brand The Bicester Collection. It introduced a minimum spend (300 euros) and an accrual cap (30,000 euros), which previously did not exist, and shortened the retroactive accrual window from 6 months to 3 months.
The mileage-earning partnership with the travel platform Trip.com also changed. Previously, accrual was available for all payment types made through the platform, but since the 15th, miles can be earned only for bookings paid through the platform. Bookings made on the platform with payment completed on-site, among others, do not earn miles.
The airline industry sees Korean Air's tightening of partner mileage accrual requirements as a move ahead of its integration with Asiana Airlines. If Korean Air wins approval for a mileage integration plan with Asiana Airlines, it will be unable to change conditions in ways unfavorable to customers for 10 years from the date of the business combination. It also cannot raise the mileage purchase price paid by card companies by more than the inflation rate compared with 2019. Outside of partner mileage programs, there is little room to maneuver.
On top of that, the Korea Fair Trade Commission recently demanded supplements to Korean Air's plan to integrate miles with Asiana Airlines. The Korea Fair Trade Commission (FTC) is said to have asked the carrier to bolster measures to expand bonus seat supply for miles during peak seasons, broaden mileage use for purchasing regular seats, and improve upgrade service and supply management. The aim is to minimize consumers' unused miles.
From Korean Air's standpoint, concern is growing as outstanding miles, which are a liability, continue to increase. As of the end of Sept., Korean Air's outstanding miles stood at 2.7937 trillion won, up 9.4% from the same period a year earlier. During the same period, Asiana Airlines' outstanding miles decreased 6.7% to 915.4 billion won.
An airline industry official said, "From Korean Air's perspective, it is in a situation where it must expand mileage seats, so reducing the accrual of miles itself may be a way to ease the burden," adding, "It likely also considered that it must maintain a long-term mileage operation plan."
A Korean Air official said, "This adjustment to the partner mileage accrual rate was decided as the two companies renewed their partnership contract with Naver, taking into account inflation and expense increases."