Korean Air's unused mileage liability tops W3tr, but redemption rate falls for second straight year

Korean Air's deferred revenue from unused mileage surpassed 3 trillion won ($2.21 billion) in the first half of this year, even as the share of passengers redeeming miles for flights fell for the second consecutive year.

Data submitted to the National Assembly's Land and Infrastructure Committee through the Ministry of Land, Infrastructure and Transport showed that Korean Air's mileage-related deferred revenue stood at 3.12 trillion won at the end of the first half of this year. That is up 275.4 billion won, or 9.7 percent, from 2.84 trillion won at the end of last year.

Mileage deferred revenue represents the accounting value of the service obligations an airline must fulfill for miles that customers have accumulated but not yet used.

Asiana Airlines posted mileage deferred revenue of 936.1 billion won at the end of last year, putting the combined figure for the two carriers at that time at 3.78 trillion won.

Mileage redemption for flights has been declining, however. The share of Korean Air passengers using mileage tickets fell from 11.8 percent in 2023 to 11 percent in 2024 and further to 10.3 percent last year — a drop for the second straight year.

The total distance flown by mileage ticket holders last year also dropped 5.1 percent to 8.01 billion kilometers, down from 8.44 billion kilometers the year before.

Korean Air said the rise in deferred revenue reflected both an increase in miles earned as travel demand grew and a tendency among members to hold off on redeeming miles while waiting to see how the carrier's integration with Asiana Airlines unfolds.

The airline also said mileage ticket usage remains higher than pre-pandemic levels recorded in 2019.

Rep. Jang Jong-tae of the Democratic Party of Korea, who requested the data, said miles are benefits that customers earn through ticket purchases and affiliated services and should be genuinely usable. "Opportunities to redeem bonus tickets on high-demand routes and during peak travel periods must be expanded," he said.