"Want to Travel Abroad for Free?" Unused Mileage Exceeds 3 Trillion Won

Korean Air and Asiana Airlines Combined 3.4 Trillion Won
Airlines Deliberate on Mileage Scale Reduction Plans

Korean Air and Asiana Airlines' unused mileage as of the first half of this year amounts to approximately 3.4 trillion KRW in monetary terms. Since unused mileage is recognized as a liability from the airlines' perspective, companies are encouraging consumers to actively use their mileage.

According to the Financial Supervisory Service's electronic disclosure system on the 21st, as of the end of June, Korean Air's deferred mileage revenue stands at 2.4637 trillion KRW, and Asiana Airlines' at 942.9 billion KRW. The combined deferred revenue approaches 3.4066 trillion KRW.

Passengers are accumulating mileage at the Korean Air counter in the departure hall of Terminal 2 at Incheon International Airport. [Image source=Yonhap News]

Deferred revenue refers to mileage amounts that are not recognized as revenue at the initial sales transaction but are recognized as revenue only when the mileage is used. On financial statements, it is considered a liability.

Compared to before COVID-19, the deferred revenue of the two airlines has increased significantly. The growth rate of deferred revenue from the end of the first half of 2019 to the current point is 12.2% for Korean Air and 33.6% for Asiana Airlines. This means that liabilities on the financial statements have increased accordingly.

The increase in unused mileage is largely due to the unique circumstances during the COVID-19 pandemic. During the pandemic, air travel demand plummeted, and considering that many flight routes were suspended, both airlines extended the validity period of mileage that was set to expire between 2020 and 2023 by up to three years.

Because of this, both airlines are working to reduce the scale of mileage liabilities and are expanding services to encourage customers to use their mileage.

Korean Air operates "Cash and Miles," a program that allows partial payment of airfare with mileage. Since June, they have also improved the system to allow in-flight duty-free products to be purchased with mileage.

Asiana Airlines has increased mileage seats through mileage refund promotions on routes to Southeast Asia, Japan, Sydney, and Honolulu.

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