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- Korean Air Lines Co., Ltd.
1370 Gong Hang-dong, Gangseo-gu
Korea, Republic of
- Main hub
- Seoul Incheon International Airport
- South Korea
- Business model
- Full Service Carrier
- Domestic | International
- Joined Alliance
- Association Membership
- Codeshare Partners
China Eastern Airlines
China Southern Airlines
CSA Czech Airlines
Delta Air Lines
KLM Royal Dutch Airlines
MIAT Mongolian Airlines
Myanmar Airways International
Established in 1962, Korean Air is the largest airline and flag carrier of South Korea. From its base at Seoul Incheon International Airport, Korean Air serves extensive domestic and international networks. The carrier's cargo division, Korean Air Cargo, is the third largest cargo airline in the world and it also wholly owns a low cost airline subsidiary, Jin Air. Korean Air is a founding partner airline of the SkyTeam alliance.
Location of Korean Air main hub (Seoul Incheon International Airport)
Korean Air share price
1,383 total articles
88 total articles
Asian carriers continue to pour additional capacity into Myanmar, building on increases which were initially pursued in 2H2012 after the market quickly opened as economic sanctions which had been in place for two decades were lifted. The Myanmar international market will exceed 110,000 weekly international seats in Jan-2014, representing an increase of about 40% compared to Jan-2012 and almost 130% compared to Apr-2012, when Aung San Suu Kyi’s National League for Democracy won landmark elections.
But so far the additional capacity has outstripped demand. International passenger traffic in Myanmar has grown by about 70% over the past two years – an impressive figure but not sufficient to keep up with the capacity increases. As a result load factors to and from Myanmar are significantly below the global average.
Nearly all of the 14 foreign carriers which were already serving Myanmar before Apr-2012 have seen load factors on their Myanmar routes drop over the last year. The nine foreign carriers which have launched and retained services to Myanmar since the market opened have also so far recorded lower than normal load factors – generally in the 50% to 70% range.
Korean Air, in one of the still-rare international airline acquisitions, bought a 44% stake of CSA Czech Airlines in 2013 for a relatively light EUR2.64 million. The Korean flag has been rewarded by growth of over 200% in the number of passengers transiting in Prague, Czech's hub. But also light are details on the strategic rationale of the acquisition. Hub cooperation – and this boosting of transit passengers – could theoretically have been achieved without equity.
While Korean Air has detailed how transit passengers in Prague have risen from about 600 a month in 2012 to a peak of 2,000 in Sep-2013, Korean has not stated what volumes it has lost in Frankfurt. Korean Air and Lufthansa had a successful interline agreement that was terminated in advance of Korean's acquisition of Czech.
Korean is touting the benefit of reaching additional European cities from Prague, but again it is unclear how much of this is growth versus replacement from Lufthansa. It is also unclear what further synergies exist between the carriers.
Also in the partnership spectrum – small but more rationale – Korean Air is expanding a deal with Etihad Airways, now a global leader in cross-border purchases and partnerships. Korean Air will code on Etihad's services to Johannesburg and Muscat while Etihad will code on Korean's services to Honolulu and Vancouver.
American Airlines’ decision to launch service from its Dallas/Fort Worth hub to Hong Kong and Shanghai is a strategic move to bolster its historically weak positioning in the US-Asia market, and is occurring at a time when some carriers in those markets are enjoying particularly favourable results on their service to North America and are rapidly expanding.
American is also positioning itself to capitalise on the growing demand between Asia and Latin America by funnelling passengers through its largest hub for connections onwards to Central and South America.
The moves by American – which also include axing its service from New York JFK to Tokyo Haneda due to unfavourable operating times – also show a diminished emphasis on Japan as a traditional stop-over as direct services become an imperative to attract and retain high-yielding business passengers.
Delta Air Lines' recent outlining of planned expansion from Seattle to Seoul and Hong Kong reflects its continuing strategy of building the airport into an international gateway partially in partnership with Alaska Air Group, Seattle’s largest carrier. Delta has been steadily expanding its operations in Seattle during the last couple of years, a market it may deem more suitable for growing further into Asia than some of its existing hubs – evidenced by the transition of service to Hong Kong from Detroit to Seattle.
Largely absent from Delta’s discussion in the latest Asian expansion from Seattle is any cooperation with SkyTeam partner Korean Air, who has ample service from Seattle to Seoul.
Delta’s silence could be illustrative of a logic that alliances are not a cure all for network optimisation that became especially pronounced during 2012 with the landmark deal between Emirates and Qantas, Air France’s forging of a partnership with Etihad and Delta tabling plans to take a 49% stake in Virgin Atlantic. Those two carriers recently won the US Department of Transportation’s (DoT) approval to forge a trans-Atlantic joint venture whose launch will coincide with Delta’s introduction of Seattle-London Heathrow in Mar-2014.
Korean Air seeks new markets after betting the house on N America, seemingly without SkyTeam support
Korean Air in Sep-2013 deployed its A380 to Atlanta, making the city the third in North America to see Korean Air's A380 service. Like fellow SkyTeam member, Air France, Korean is focussing much of its A380 attention on US points - as befits Korean Air's status as the largest Asian airline in North America, despite its population of only 50 million.
But Korean Air is realising this position comes with the corollary of heavy exposure to the North American market. Some 36% of its ASKs are on North American routes, a single market proportion that no other Asian carrier applies.
Airlines are looking to reduce risk more than ever, and Korean Air is no different: the carrier is looking for new markets it can build with time to diversify itself away from North America. Yet North America will not lose prominence anytime soon for Korean Air. This is partially due to North America's strength but also Korean Air's weakness so far in finding new markets. It has entered Nairobi and purchased CSA Czech Airlines, both moves that will need considerable time to mature. Korean Air has broken Asian airline inertia and is thinking creatively – in some areas, at least – but now needs to bed down the strategy.
As CAPA's LCCs and New Age Airlines Sep-2013 conference in Seoul clearly identified, the wheels are starting to turn in Korea, the home of the first LCCs in North Asia. But more recently it has suffered from stagnation as carriers do not offer a cost base that is competitive with other LCC developments in the region. Jin Air is the country's second largest LCC and wholly-owned by Korean Air. This brings advantages but also disadvantages, as CEO Won Ma said at the CAPA conference. Mr Ma sees that Jin Air needs to improve its cost base and has started to charge for small ancillaries, but not luggage. Jin Air also incurs higher costs from using some Korean Air services.
2012 was Jin Air's third year of profits, which were very respectable given the industry but lagging considering Jin Air's modest network, with limited competition. But the Jin Air-Korean Air relationship is far ahead of Asiana and its partially-owned LCC unit Air Busan, struggling to remain relevant up against Jin Air and the the even larger Jeju Air, Korea's largest independent LCC. If Jin Air, like other LCCs, can make very necessary cost structure reforms, there are increasing opportunities as the Korean outbound market grows, thanks to the strengthening of the won. It is time now more than ever to apply more pressure on the accelerator.
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