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Hanjin Group Chairman at Risk of Being Deprived of Management Rights in Korean Air
Korean Gov't Pushing to Revise Law on Aviation
Hanjin Group Chairman at Risk of Being Deprived of Management Rights in Korean Air
  • By Jung Min-hee
  • November 15, 2018, 10:34
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Hanjin Group chairman Cho Yang-ho may be deprived of his management rights in Korean Air and Jin Air if the law on aviation is revised as planned by the Ministry of Land, Infrastructure and Transport.

The Ministry of Land, Infrastructure and Transport is planning to revise the law on aviation so that airline executives are disqualified in the event of a monetary penalty or a more severe punishment. If the law is amended as planned, Hanjin Group chairman Cho Yang-ho may be deprived of his management rights in Korean Air and Jin Air. Last month, the Public Prosecutors’ Office indicted him on charges of business malpractices and embezzlement of 27 billion won. The first trial is scheduled for late this month.
 

According to the ministry’s plan, preconditions for the disqualification will include punishments following unfair intra-group transactions, unfair trade, tax and customs duty evasion, smuggling and penal offenses based on violence, business malpractices and embezzlement. In addition, the duration of disqualification will be five years in the event of imprisonment without labor or heavier punishment and two years in the event of a monetary penalty. At present, the disqualification can occur only when an executive violates the aviation law and the durations are three years and zero, respectively.

The Hanjin Group chairman is likely to be deprived of his rights once the law is revised. His charges also include violations of the laws on taxes and pharmaceutical affairs and his family members as well as himself are undergoing investigations at the Korea Customs Service for smuggling and tax evasion.

At the same time, the ministry is going to amend a law so that a monopolized air route can be run by another airline through charge and service evaluation on a five-year basis. At present, national airlines of South Korea are monopolizing 60 routes to and from China, Mongolia, and other countries. Consumers have complained about their business practices such as high charges and services limited to peak seasons.

After the revision, however, competition will occur for the monopolized routes, and then the charges can be lowered and the frequency of the services can increase. At present, the monopoly can be maintained if the frequency is at least 20 weeks a year. However, the minimum frequency is likely to be adjusted to 40, 30, 20 and 15 weeks a year after the routes are divided into four groups. The first group is likely to include the most popular routes, such as those to and from China and France.