SEOUL, June 24 (Korea Bizwire) — South Korea plans to establish a cooperative to empower the South Korean airline industry, which is facing a major crisis driven by the coronavirus.
“We began to prepare to amend the Aviation Business Act to establish airline cooperatives and introduce flight assurance programs,” said a source from the Ministry of Land, Infrastructure, and Transport on Tuesday.
“We plan to come up with a new bill later this year in order to establish airline cooperatives within the following year.”
Airline cooperatives provide guarantees, loans, and create investment funds to help members sustain business operations.
The need for a cooperative began to take shape within the airline industry as the coronavirus outbreak prolonged, slashing demand for air travel and bringing the airline industry to face a major liquidity crisis.
The airline industry has always been vulnerable to certain external factors such as oil prices, foreign exchange rates, and pandemics, generating a consensus that airline businesses need an agency to save up funds for crisis situations.
In response, the ministry began preparatory works for amending relevant legislation to enable the establishment of airline cooperatives, and collect insights from the airline industry this week to discuss specific methods for financing.
The government also plans to reduce the cost of aircraft purchases by raising the overall credit rating of the airline industry, and introduce flight assurance programs to invite new investments in aircraft materials, parts, and equipment.
M. H. Lee (email@example.com)