Korean Air’s controversial business CyberSky will fold as Korean Air Chairman Cho Yang-ho and his three children, including former vice president Cho Hyun-ah, have come under criticism for amassing a great deal of wealth by awarding CyberSky lucrative contracts.
At the National Policy Committee’s annual audit of state affairs, held on October 6, Kim Jae-ho, Director of Management Strategy Division at Korean Air, said that Korean Air would close down its unlisted affiliate CyberSky.
Kim’s comment came after Rep. Kim Ki-sik of the main opposition New Politics Alliance for Democracy, criticized Korean Air’s intra-group dealings, saying: “Korean Air flight attendants sell duty-free goods on board, so Korean Air can handle the job for itself. Therefore, there is no reason for awarding the business right to CyberSky, owned by Cho Yang-ho’s three children.”
Cho Yang-ho’s three children, Cho Hyun-ah, Korean Air executive director Cho Hyun-min and Hanjin KAL executive vice president Cho Won-tae, hold a 100 percent stake in CyberSky, each of whom owns a third of the company.
Korean Air has awarded CyberSky the exclusive rights to sell in-flight duty-free goods. In 2013 CyberSky raked in 4.29 billion won in sales, 83.7 percent (3.21 billion won) of which came from its business with Korean Air. Cho’s three children have garnered a great deal of wealth through such intra-group dealings.
“Korean Air has channeled contracts, worth 17.5 billion won, into CyberSky,” Rep. Kim pointed out.
The Korea Fair Trade Commission (FTC), S. Korea’s antitrust watchdog, is probing into Korean Air’s intra-group dealings. “We will continue to investigate Korean Air regardless of whether Korean Air will close down CyberSky or not,” said Jeong Jae-Chan, Chairman of the FTC.
