"Unable to Receive Flight Ticket Refund?"... Card Industry Takes Legal Action Against Eastar (Comprehensive)

Risk of Loss Processing for Flight Ticket Cancellation Fees
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 airline ticket cancellation refunds they have not recovered from Eastar Jet. Most credit card companies have initiated legal actions to begin procedures to reclaim the cancellation refunds.

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

Previously, Shinhan, Samsung, KB Kookmin, and Lotte Card applied to the Seoul Central District Court or Gunsan Branch of Jeonju District Court to order Eastar Jet to pay the refund amounts for canceled airline tickets to the credit card companies. Eastar Jet has filed objections against Shinhan, Samsung, and Lotte Card. The remaining credit 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 hearing dates have not yet been set.

Airline Ticket Cancellation Refunds Approx. 8 Billion KRW... Low Chances of Recovery

The amount of airline ticket cancellation refunds unpaid to credit card companies is reported to be around 8 billion KRW. The amounts range from about 400 to 500 million KRW on the low end to around 2 billion KRW on the high end. Initially, credit card companies planned to refund consumers for the airline tickets canceled due to the impact of COVID-19 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, international routes were shut down, followed by a complete shutdown of all routes including domestic flights on March 24. On the 7th of this month, the company decided to lay off 605 employees. Eastar Jet is not in a position to return airline ticket refunds to credit card companies.

Despite legal procedures, credit card companies view the likelihood of actually recovering the refunds as low. A credit card company official said, "Eastar Jet’s objection seems to mean they cannot pay now and are asking for more time," but added, "Considering Eastar Jet’s situation, the chances of actually recovering the refunds are not high." Another credit card company official also said, "From the credit 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.