Prepaid Air Tickets and Point Substitution Accumulation... Cash Securing 'Life-or-Death' for the Airline Industry

Due to the impact of the novel coronavirus infection (COVID-19) pandemic, the sense of crisis in the aviation industry is growing, and on the 8th, Terminal 2 of Incheon International Airport is quiet. Photo by Moon Honam munonam@

[Asia Economy Reporter Yoo Je-hoon] National airlines facing liquidity crises due to the novel coronavirus infection (COVID-19) are making all-out efforts to secure cash by introducing various systems such as 'prepaid air tickets' and 'point substitution refund system.'

According to the aviation industry on the 21st, Korean Air is selling prepaid air tickets that can be purchased at up to 15% cheaper until the 31st of next month. Korean Air's prepaid air tickets apply to all domestic routes departing from July 1, including all seat classes such as Economy, Prestige, and First Class. The validity period of the prepaid air tickets is two years, which is longer than regular air tickets, and anyone who is a Skypass member under the purchaser's name can use them. No separate fee is charged for refunds within the validity period, but a refund fee of 30,000 KRW is deducted after expiration.

The prepaid air tickets offer discounts based on the purchase price: 10% for 1,000,000 KRW, 12% for 3,000,000 KRW, and 15% for 5,000,000 KRW. For example, if a customer who purchased a 1,000,000 KRW prepaid air ticket buys an 800,000 KRW Economy seat on the Korean Air website for actual travel, a 10% discounted price of 720,000 KRW is applied.

Jeju Air also introduced a system allowing customers who cancel their flight reservations by June 30 to substitute their refunds with mileage points called 'Refresh Points.' When choosing point substitution instead of a refund, additional points equivalent to 10% of the final refund amount are credited.

The industry explains that the purpose of these systems by both companies is to secure as much cash as possible. They are proactively starting sales in preparation for the post-COVID-19 stabilization phase while aiming to minimize cash outflows caused by refunds. An industry official said, "Currently, all airlines' cash flow is dried up," adding, "From May onwards, the business conditions are expected to gradually improve, starting with domestic flights."

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