'The Last Puzzle' Songhyeon-dong Site…Korean Air Urges "Seoul City to Withdraw Park Designation"

"De Facto Occupation"

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. On the 28th, the city announced that it submitted the 'Songhyeon-dong Korean Air Site Park Decision Plan' for consultation at the Urban and Architecture 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] Korean Air’s issue with the Songhyeon-dong site, the "final puzzle" among the self-rescue measures introduced during the COVID-19 pandemic, is not being resolved easily. As the Anti-Corruption and Civil Rights Commission (ACRC) has begun mediating between the two parties, Korean Air is strongly opposing Seoul City’s push to designate the site as a cultural park, calling it "virtually an illegal land hoarding."

On the 28th, Korean Air released a statement saying, "Seoul City is trying to secure the Songhyeon-dong site by prioritizing its designation as a cultural park without any concrete facility plans or budget preparation," and urged, "Please stop all acts that hinder private sales." Korean Air submitted an opinion letter containing these points to the ACRC on the 25th.

Korean Air’s renewed opposition comes as Seoul City has not relented in its intention to designate the Songhyeon-dong site as a cultural park even after the ACRC’s first meeting with relevant parties. Korean Air believes that Seoul City’s move may violate the Enforcement Decree of the National Land Planning and Utilization Act. The current decree states that urban and military planning facilities must be determined at an appropriate level considering execution capability and that plans must be established considering feasibility. Seoul City is criticized for attempting to preemptively secure the site without specific plans or funding sources.

A Korean Air official said, "According to the minutes of the Seoul City Council meeting, the responsible official mentioned that public discussion would be promoted after securing the site, and that it has not yet been decided what facilities will be installed," adding, "Moreover, the city openly stated that payment would only be possible by the end of next year or early 2022, which is evidence that Seoul City’s push for the cultural park is an unreasonable forced plan to preempt the Songhyeon-dong site."

Korean Air is putting its all into the sale of the Songhyeon-dong site because this case represents the last puzzle piece of its self-rescue plan. Earlier, as the business downturn due to COVID-19 deepened, Korean Air introduced a self-rescue plan focused on capital expansion. Major components such as a rights offering (1.127 trillion KRW) and the sale of the in-flight meal and in-flight sales business (990.6 billion KRW) have been completed. Additionally, Korean Air has continuously pursued cost-cutting measures such as selling small-scale assets like the company housing in Jeju Island (about 30 billion KRW) and reducing labor costs.

The remaining puzzles in Korean Air’s self-rescue plan are the Songhyeon-dong site and the shares of Wangsang Leisure Development Co., Ltd., located in Jung-gu, Incheon. Considering that the book value of Wangsang Leisure Development is about 160 billion KRW, the success of the Songhyeon-dong site sale essentially determines the completion of the self-rescue plan. The Songhyeon-dong site, approximately 36,632 square meters in size, is estimated to have a market value of 500 to 600 billion KRW, which is significantly different from the price Seoul City mentions (about 420 billion KRW).

An industry insider said, "Given the severity of the crisis caused by COVID-19, Korean Air even sold its prime in-flight meal business, but it is a sector they will have to regain someday," adding, "Considering that the COVID-19 situation is entering a prolonged phase, Korean Air inevitably needs the sale of the Songhyeon-dong site to secure mid- to long-term liquidity."

Meanwhile, the two parties are scheduled to meet again at the ACRC’s second meeting with relevant parties on September 1 to express their opinions. Korean Air reiterated, "Seoul City should rightfully withdraw its forced designation of the Songhyeon-dong site, which is private property of the company, as a cultural park," and emphasized, "It should also not interfere with the process of selling to other private buyers within this year."

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