(LEAD) Gov't decides not to cancel Jin Air's license

All News 11:12 August 17, 2018

(ATTN: UPDATES with quote and background)

SEOUL, Aug. 17 (Yonhap) -- South Korea's government said Friday that it has decided not to revoke Jin Air's license, ending weeks of business uncertainty for the low-cost affiliate of Korean Air Lines Co. over its illegal appointment of a foreign national to its board of directors.

Under South Korean aviation law, only South Koreans can be registered as a director of an airline.

The company, however, appointed Cho Hyun-min, an American citizen and the younger daughter of Korean Air Chairman Cho Yang-ho, to serve as a board member of Jin Air between 2010 and 2016.

On Friday, the Ministry of Land, Infrastructure and Transport said it made the decision to allow the low-cost carrier to stay in business after relevant experts exchanged views on how to deal with the low-cost carrier's (LCC) violation.

"We have decided not to cancel the license as negative ramifications, such as job insecurity and inconvenience of customers ... far outweighed social benefits of revoking the license," the ministry said in a statement.

The widely expected decision came as a relief to about 2,000 Jin Air employees and is in line with South Korea's efforts to create jobs for young people.

The unemployment rate for young adults -- those aged between 15 and 29 -- was 9.3 percent in July, much higher than the overall jobless rate of 3.7 percent, according to government data released on Friday.

However, as punishment for the breach of the aviation law, the ministry said it will restrict approval of new air routes by Jin Air and the registration of new airplanes, as well as the arrangement of non-regular flights.

The ministry said the punitive steps will remain in place until after Jin Air is found to have normalized its management by faithfully improving its corporate culture and taking steps not to again violate aviation law.

Jin Air hit turbulence in March when younger the Cho allegedly threw water in the face of an ad agency manager during a meeting in a fit of anger, behavior that sparked public outrage against the controlling family of Korean Air and Jin Air.

Cho Hyun-min is the younger sister of Cho Hyun-ah, who gained global notoriety for the "nut rage" incident in 2014. Cho Hyun-ah forced a plane back to the boarding gate at New York's John F. Kennedy International Airport because she was upset with the way her nuts were served -- in an unopened bag instead of on a plate.

Cho Yang-ho and his wife -- Lee Myung-hee -- were also questioned over separate allegations.

In April, South Korea's customs service raided the Korean Air headquarters over suspicions that Cho's family members sneaked luxury goods into the country without paying duties.