'Songhyeon-dong Site' Mediation Begins Today... Will It Find a Breakthrough?

Alternative Mentioned but 'KAMCO Asset Sale Program' Not Applied... Expectations Rise
Significant Disagreements and Lack of Enforcement Power for Mediation Proposal Raise Skepticism

Seoul City is promoting a plan to change the Korean Air site, currently an empty lot in Songhyeon-dong, Jongno-gu, into a 'Cultural Park' under urban planning facilities. The city announced on the 28th that it submitted the 'Songhyeon-dong Korean Air Site Park Decision Plan' for consultation at the Urban and Architectural Joint Committee held on the 27th. The decision plan includes changing the site, currently designated as a special planning zone within the Bukchon district unit plan, into a cultural park. The photo shows the Korean Air site in Songhyeon-dong, Jongno-gu, Seoul, which Korean Air is currently promoting for asset sale. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Yoo Je-hoon] The Anti-Corruption and Civil Rights Commission (ACRC) will begin mediation regarding the controversy over the conversion of the Songhyeon-dong site into a park, a conflict sharply dividing Korean Air and the Seoul Metropolitan Government. However, since the ACRC's mediation lacks legal binding power and the two sides have significant disagreements over the price and payment methods of the Songhyeon-dong site, many remain skeptical about the possibility of a dramatic agreement.

According to the aviation industry on the 20th, the ACRC held a closed-door meeting at 10 a.m. that day, attended by representatives from Korean Air and the Seoul Metropolitan Government, to hear both sides' opinions. From Korean Air, COO Lee Soo-geun attended, while from Seoul City, Lee Sang-myeon, head of the Public Development Promotion Division, was present.

The Songhyeon-dong site, located in Jongno-gu, Seoul, spans approximately 36,642 square meters and is known as the last "golden land" remaining in the city center. Korean Air, facing financial difficulties due to the COVID-19 pandemic, sought to sell the site to secure liquidity, but Seoul City’s plan to develop a cultural park led to the public bidding being aborted.

As the plan faced collapse, Korean Air filed a grievance complaint with the ACRC in June. On the 12th, it also submitted a statement requesting the ACRC to prevent Seoul City’s unilateral push for park development. This came amid signs that Seoul City might unilaterally submit the Songhyeon-dong site cultural park plan to the Urban and Architecture Joint Committee at the end of this month.

The ACRC is expected to prepare a recommendation soon, using this initial investigation meeting as a starting point. Under current law, the ACRC must issue a recommendation related to the grievance complaint within 60 days (with a possible 60-day extension).

Some suggest the possibility of a dramatic resolution. Korean Air has not applied for the Korea Asset Management Corporation (KAMCO)’s "Corporate Asset Sale Support Program," which had been mentioned as an alternative. An industry insider said, "As of today, the known first deadline, they do not plan to apply," adding, "This is likely due to expectations for the ACRC’s mediation proposal."

However, skepticism remains about whether the ACRC’s mediation can materialize. The two sides have significant differences. Seoul City has estimated the site’s price at 467.1 billion KRW and intends to accept installment payments over 2021-2022. On the other hand, Korean Air, urgently needing liquidity, finds it difficult to accept a price lower than the market range (500-600 billion KRW) and the installment payment method. Moreover, since the ACRC’s recommendation is not legally binding, even if a mediation proposal acceptable to Korean Air emerges, it remains a separate issue whether Seoul City will accept it.

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