Chinese carriers are delaying the start of air links with Korea as they hold out for pre-emptive compensation, amid growing concerns that foreign carriers are eating into their market share.
The delay centres on Chinese demands that the Korean carriers pay a commission for 'extra' passengers on their flights, a claim apparently based on fears that Chinese nationals will prefer to travel with the two Seoul-based carriers. This trend has already emerged in other ex-China markets, since Beijing dropped rules forcing its citizens to travel on their national airlines.
Only days before both Asiana and Korean Airlines were due to launch flights on 5 Novem ber, the Chinese airlines - led by Air China - hit Seoul with a surprise demand for special payments designed to offset predicted revenue losses due to passenger defections.
The Chinese are demanding a commission from Asiana and KAL whenever their traffic exceeds that of the Chinese airlines by 20 per cent; the two Korean airlines would have to pay a 15 per cent surcharge on the fare for every passenger they carry above the limit.
A spokesman for KAL, which has completed preparations for services to Beijing, Quindao, Tianjin and Shenyang, describes the Chinese demands as 'unique' and says they have come as a complete surprise.
KAL and Asiana attempted to reach a compromise - a 10 per cent commission when passenger numbers exceeded those of the Chinese airlines' by 30 per cent - but the proposal was rejected. Surprisingly, neither government is involved in the negotiations, which were stalled at presstime with the Chinese carriers refusing to give way.
KAL and Asiana attempted to reach a compromise - a 10 per cent commission when passenger numbers exceeded those of the Chinese airlines' by 30 per cent - but the proposal was rejected. Surprisingly, neither government is involved in the negotiations, which were stalled at presstime with the Chinese carriers refusing to give way.
Source: Airline Business
