No “Pil Sung” for Korean Air

It’s probably fair to say that Heather Cho Hyun-ah knows more about macadamia nuts than most people.

The former vice-president of Korean Air became infamous in late 2014 after ordering the flag carrier’s aircraft back to the gate at JFK New York as it was about to take off for Seoul. The reason: she was unhappy the nuts served in first class came in a bag, instead of on a plate. This incident has even made it into Wikipedia as the nut rage incident.

Being petulant seems to run in the Cho family. Last month her younger sister Emily Cho Hyun-min, a senior vie-president in Korean Air, was suspended following allegations she threw water into the face of an advertising manager.

But wait… the sisters’ mother is now being accused of behaving crudely and rudely, too. A video recorded in 2014 purportedly showed their mum physically harassing workers at a construction site being developed into a hotel owned by the Hanjin Group.

More seriously, the Cho sisters are not just being accused of being ill mannered; Korea’s Custom Service now say they are probing allegations the two women smuggled luxury goods into the country using Korean Air planes without paying duties.

Korean Air is slated to host the Association of Asia Pacific Airlines (AAPA) 62nd Assembly of Presidents on the resort island of Jeju on October 18-19. It remains unclear if Emily, Heather and their mother will be there to mingle with the delegates…

The Hanjin Group, one of the country’s biggest chaebols or conglomerates, is the owner of Korea’s flag carrier. Hanjin’s founder is Cho Choon Hoon, who was also Korean Air’s former head. His son Cho Yangho is the current chairman and co-CEO of the airline. The president and co-CEO of Korean Air is Cho Won-tae, Yangho’s only son and grandson of Choon Hoon.

Following the above incidents, there are murmurs amongst Korean Air employees for the airline to be run and managed by professionals (meaning non-Cho family members), especially since the carrier is publicly listed. Hanjin Group controls about 30% of the airline while Korea’s National Pension Service has a 13% stake.

There have increasingly been calls for the flag carrier to cease being called Korean Air, as it is majority owned by the Cho family, and not the Korean people.

Jin Air

Interestingly, since the historic meeting between South Korean president Moon Jae-in and North Korea’s leader Kim Jong-Un on April 27, there’s widespread discussion within the Korean aviation community of a (potential) unified airline for the two Koreas. This came after Pyongyang made a request last week to the International Civil Aviation Organisation (ICAO) to open up new international air routes.

Not surprisingly this has sparked a lot of speculation on North Korea’s appetite to open up. But all things being equal, a joint national airline is something that is far off. The immediate thing that needs to happen before there’s any talk of any collaboration is the official cessation of the Korean War and the removal of the Demilitarised Zone (DMZ).

Having said that, a Korean Air employee we communicated with recently perhaps spoke for many of his colleagues when he suggested (half in jest) the two Cho sisters (and maybe their mum) be posted to the national airline of North Korea, Air Koryo, to “learn some manners”.

Korean Air’s stock has been stagnant since the start of 2018, and closed Friday at KRW34,150 (USD32.15) per share while that of its 100%-owned low-cost subsidiary, Jin Air, ended at KRW32,150. From an equity perspective Jin Air is performing better than its parent, with its stock price gaining almost 20% since January this year.

Jin Air operates six domestic flights and 26 international destinations, including Kota Kinabalu and Johor Bahru in Malaysia. It operates four widebody Boeing 777-200ERs on its long-haul flights. The airline’s market cap is around KRW500 billion, smaller than its discount rival, Jeju Air with a market cap of KRW740 billion.

*Pil Sung: In Korean it means “certain victory”

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