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Sparks May Fall On 600,000 Skypass Members

Posted April. 22, 2005 23:35,   


The mileage alliance between Korean Air and BC Card could be discontinued.

If the alliance ends, more than 600,000 BC-Skypass members will not receive Korean Air mileage credit when they use the BC Card.

According to financial circles yesterday, Korean Air recently informed BC Card that it would terminate its mileage alliance contract with BC Card.

Korean Air has sent public notices to 11 BC Card member banks asking if they will sign individual mileage alliance contracts.

However, BC Card member banks say that individual contracts are difficult.

A Woori Bank spokesperson said, “We cannot make individual contracts by assigning credit card-related work to BC Card, and managing card users will be hard in reality.” He added, “If an individual contract is made, then the mileage price bought from Korean Air will increase, which is a burden on us.”

A mileage system is a system where credit card companies buy mileage from an airline and add one mile for every 1,500 won spent with their credit card.

Korean Air charges 12 won for each mile to large credit card companies such as BC Card. For small cards, it charges 15 won per mile.

Therefore, even though individual banks sign mileage contracts with Korean Air, card members would have to spend more than 1,500 won to accumulate a mile or other services are expected to lessen.

If BC Card member banks do not sign individual contracts, then BC-Skypass members will not receive further mileage credits after June.

To justify its request, Korean Air says that BC Card is purchasing mileage at a very low price persuading Korean Air to give at low price with its large number of members.

Korean Air personnel said, “The mileage contract is an issue between companies. It is not a method of increasing the mileage price. “He went on to say, “BC-Skypass members can use their mileage through other cards of banks that trade with us.”

On the other hand, the Credit Finance Association, which is made up of credit card companies, said, “As Korean Air increased its mileage price with their stronger position, we filed a suit against Korean Air with the Fair Trade Commission last year. Whether Korean Air violated fair trade law or not has not been decided yet.”

Sun-Woo Kim Hyo-Lim Son sublime@donga.com aryssong@donga.com