Government to Purchase 80% of This Year's Airline Tickets by June to Support Aviation Industry

[Image source=Yonhap News]

[Asia Economy Reporter Chunhee Lee] The Ministry of Land, Infrastructure and Transport announced on the 4th that it will prepay approximately 1.55 billion KRW, about 85% of the overseas travel budget for airfare, to purchase tickets from domestic airlines in order to support the aviation industry facing difficulties due to the spread of the novel coronavirus infection (COVID-19), and will sign a business agreement with airlines.

Earlier, on the 8th, the government selected the pre-purchase of airline tickets worth about 160 billion KRW, approximately 80% of the airfare budget for each agency, as one of the tasks through the 4th Emergency Economic Meeting. Subsequently, the Ministry of Land, Infrastructure and Transport prepared guidelines for the pre-purchase of airline tickets through collaboration with the Ministry of Strategy and Finance and other related ministries and airlines, and established procedures and systems such as drafting a standard agreement between agencies and airlines to create a pilot model.

Building on this model, the pre-purchase system for airline tickets is planned to be gradually expanded with the goal of final execution by next month. It will be applied to central government ministries and public institutions within this month, and then expanded to local governments, education offices, and local public institutions next month.

When an agency pre-purchases airline tickets, the execution is carried out by deducting the airfare from the prepaid amount during the actual business trip preparation and ticket issuance process. Since the type and destination of business trips vary by agency, the choice of airlines for pre-purchase and the prepaid amount are left to each agency's discretion. However, for short-distance trips, it is planned to recommend pre-purchasing 30% of tickets from low-cost carriers (LCCs).

If there is any prepaid amount not executed by the end of this year, the airline must refund it to the respective agency. The Ministry of Land, Infrastructure and Transport plans to mandate subscription to guarantee insurance related to this matter.

Kim Itak, Director of Aviation Policy at the Ministry of Land, Infrastructure and Transport, said, "The pre-purchase and prepayment of airline tickets can greatly help airlines struggling with temporary liquidity shortages" and "we hope it will expand through voluntary participation not only in the public sector but also in the private sector, contributing to the promotion of 'good consumption.'"

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