KNA was formed in South Korea in 1948 and was the first airline in Korea.
Although the name was National Airlines the company was in fact privately
owned and never grew beyond being a small regional carrier. Services were
suspended during the Korean War but were resumed soon afterwards and
continued until KNA’s demise in 1962.
Various sources give 2 differing reasons for the end of KNA. In one version,
the founding chairman of KNA, Ryu Gye-Taek, resisted the nationalization of
his airline and challenged the government’s authority to do so. At the end
of 1961 the Korean government was nationalizing many industries, including
transportation, in an attempt to boost economic growth. It is said that an
already nationalized Bank of Korea colluded with the government to deny KNA
loans that it needed to pay off corporate taxes. Forced into default, the
company lost it’s privately held status and KNA’s assets were taken over by
the government run Korean Air in 1962.
A second version of KNA’s demise blames its end on other reasons. The
insufficient skills of the management team and lack of current technology,
coupled with a very low demand for air travel and inability to compete with
foreign flag carriers all lead to KNA’s bankruptcy in 1962.
The government run Korean Air Lines did not fare much better in spite of a
large effort to acquire new aircraft and expand international routes. Lack
of management skills lead to the failure of the government enterprise and
the airlines re-privatization in 1969 as Korean Air. Since that time the
airline has shown steady growth and success.