"Unable to Receive Flight Ticket Refund?"... Card Companies Take Legal Action Against Eastar

Flight Ticket Cancellation Fee Loss Processing Crisis
Major Card Companies Take Legal Action

[Asia Economy Reporter Ki Ha-young] As Eastar Jet pursues a resale, credit card companies face the risk of having to write off losses on the canceled ticket refunds they have not recovered from Eastar Jet.

According to the credit card industry on the 8th, Hyundai Card and Hana Card began legal procedures such as filing for payment orders to recover ticket refunds from Eastar Jet around mid-last month. BC Card, which processes card payments for companies like Woori Card, is also expected to initiate legal procedures soon. If BC Card joins, all major credit card companies will be taking legal action regarding Eastar Jet ticket refunds.

Previously, Shinhan, Samsung, KB Kookmin, and Lotte Card applied to the Seoul Central District Court or Jeonju District Court Gunsan Branch to order Eastar Jet to pay the refund amounts for canceled tickets to the card companies. Eastar Jet has filed objections against Shinhan, Samsung, and Lotte Card. The remaining card companies, including KB Kookmin Card, are also expected to file objections sequentially. Since the debtor Eastar Jet has objected to the payment order application, the case is expected to proceed to litigation, but specific schedules such as trial dates have not yet been set.

The amount of unpaid canceled ticket refunds by the credit card industry is known to be about 8 billion KRW. The amounts range from approximately 400 to 500 million KRW on the low end to about 2 billion KRW on the high end. Initially, the card companies planned to refund consumers for the tickets first due to the large number of flight cancellations caused by the COVID-19 pandemic and then recover the amounts from Eastar Jet. However, the path to recovery became uncertain after the merger and acquisition (M&A) contract between Jeju Air and Eastar Jet was canceled.

As of the first quarter, Eastar Jet’s total capital was negative 104.2 billion KRW, indicating capital erosion. Since February, employees’ wages have been delayed, and on March 9, the airline shut down international routes, followed by a complete shutdown of all routes including domestic flights on March 24. On the 7th of this month, Eastar Jet decided to lay off 605 employees.

Despite the legal procedures, credit card companies view the likelihood of actually recovering the refund amounts as low. A credit card company official said, "Eastar Jet’s objection seems to mean they cannot pay immediately and are asking for more time," but added, "Considering Eastar Jet’s situation, the possibility of actually recovering the refunds is not high." Another credit card company official also said, "From the card companies’ perspective, regardless of whether the refunds are actually recovered, they have no choice but to do everything possible procedurally."

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