South Korea's Ministry of Land, Infrastructure, and Transport (MOLIT) cited improved corporate governance at Jin Air (LJ, Jeju) for lifting a ban on the LCC offering new routes, it said in a statement on March 31. It has also allowed the carrier to register new aircraft and provide unscheduled flights.
However, the move is unlikely to give any immediate relief to Jin Air, which has already suspended all of its international routes amid the coronavirus crisis.
As previously reported, the Korean Air affiliated budget carrier was penalised in August 2018 when an investigation found that Cho Hyun-min, one of the daughters of Cho Yang-ho, late chairman of Korean Air (KE, Seoul Incheon) parent Hanjin KAL, had been a registered Jin Air board member between 2010 and 2016 despite holding US citizenship.
Under South Korea's Aviation Business Act, foreigners are prohibited from being members of airline boards. Jin Air was consequently banned from opening new routes, acquiring additional aircraft, and hiring new personnel. In September 2019, Jin Air appealed to the government to lift the sanctions, which it said had severely restricted its business.
The LCC suffered from the deteriorating ties between Korea and Japan, and it was barred from acquiring new route licenses to destinations in countries such as China, Singapore, and Mongolia. Its fleet has also been capped at 28 aircraft, namely twenty-four B737-800s and four B777-200(ER)s.
The ministry said in its March 31 statement that Jin Air had “prepared a policy to improve the governance structure that strengthened the independence of the board of directors and the role of checks against the management.”
The airline had succeeded in strengthening the independence of its board of directors, the ministry elaborated, by expanding the number of directors appointed from outside the company from three to four, abolishing further non-executive director posts held by executives of Hanjin KAL to minimise its influence, and appointing one of the outside directors as chairman.
Jin Air had also set up a governance committee to resolve matters related to shareholders' rights as well as a corporate governance structure to clarify the directors' liability for damages. And it had enhanced compliance management by selecting compliance officers, increased the number of people in its legal department, and would conduct independent audits separate from the rest of the group.
