Korean Air, its white knight Naver close ranks in digital partnership

South Korea’s national flag carrier Korean Air Lines Co. and online platform giant Naver Corp. are expanding their business cooperation in digital services following a recent move seen as closing ranks between the mutual white knights.

Korean Air and Naver Financial Corp., the fintech arm of the online behemoth, on Friday agreed to swap Naver Pay’s reward points with flight mileages for their customers.

Under the agreement, users of the Naver Pay Point, the online platform’s point reward program, can convert 22 points, or 22 won, they earn from online shopping at Naver Pay’s member stores into 1 Korean Air Skypass mile.

Naver Financial’s’ Naver Pay is a mobile payment service for e-commerce transactions that enable users to pay for goods online.

Naver Pay users can convert up to 110,000 points into 5,000 Skypass miles a month.

Meanwhile, 600 miles earned under the Skypass program will allow Naver users to use the online platform’s digital subscription service Naver Plus for one month free of charge.

Naver is already in a business cooperation pact with Korean Air to help the airline with its digital innovation efforts in the flight services sector.

MUTUAL WHITE KNIGHTS

The strengthened business tie-up comes after Naver heavily bought into shares of Hanjin KAL Co., the parent of Korean Air.

Data from the Financial Supervisory Service’s public disclosure system showed in April that Naver purchased 488,364 shares of Hanjin KAL for 34.14 billion won ($27.8 million) throughout last year.

The share purchase followed Naver’s acquisition of 174,636 shares in Hanjin KAL worth 8.57 billion won in 2020. Through the series of share purchases, the internet portal giant’s total stake in Hanjin has risen to 1%.

Naver said it bought Hanjin KAL shares to forge a “strategic partnership,” but industry watchers said Naver hopes to become one of Hanjin KAL's key friendly shareholders, throwing its clout behind Korean Air Chairman Cho Won-tae in a family feud over management rights.

In return, Naver would also hope to secure support from Chairman Cho and his friendly shareholders if a hostile takeover bid or a management rights dispute occurs at Naver, according to industry officials.

Korean Air is currently putting the final touches on its acquisition of crosstown rival Asiana Airlines Inc.

Write to Ik-Hwan Kim at lovepen@hankyung.com
In-Soo Nam edited this article.