geoff dixon - Orient Aviation

I call these Eastern European countries,
‘China in Europe’,” said Choi.
Whatever the promise held in these new
markets, there could be no doubting the role
China’s growth has played in KAL’s recent
success. In 1995, it carried 7,401 tonnes of
cargo on its China routes. Last year that had
expanded to 111,851 tonnes. This year trade
volume between South Korea and China is
expected to top US$100 billion. And, when
trans-shipments via Incheon International
Airport (see page 38) are taken into account,
China’s importance becomes inescapable.
At present, KAL flies regular services
to Beijing, Shanghai and Tianjin, as well
as Hong Kong. It added a twice-weekly
service to Guangzhou this year as well as
flights to Hangzhou under charter deals
that circumvent strict, formal traffic rights
arrangements. Both cities were keen for KAL
to come, said Choi.
One of three new B747-400ERFs to
arrive late this year and early in 2006 may
be deployed to Xiamen and Choi is keeping a
watchful eye on further developments in the
west of the country,” said Choi.
For now, however, there is the vexed
matter of KAL’s planned joint venture
(JV) with Okay Airways, China’s first
private carrier, based in the northern city
of Tianjin.
“Okay is not OK,” said Choi with a
chuckle. “It looks like they are asking too
much from KAL. We are looking to have
a different kind of JV in China. Not like
Singapore Airlines with Great Wall Airlines
[in Shanghai] and Lufthansa with Jade
Cargo [in Shenzhen]. We will take some
kind of stake in Okay, let’s say 25% with
24% going to another Korean company. The
problem is that Okay is asking double the
price, maybe triple.
“We will not rush to push forward this
cooperation. The problem could take a year
[to solve]. We have plans to make both KAL
and Okay a success in the market. They should
also buy our know-how, experience and brand
name. They want too much money.”
KAL can afford to be patient. It has been
in the cargo game for a long time, starting
from the airline’s establishment
in 1969. A global network was
envisioned as far back as the 1970s
as South Korea’s industrialization
began to take off. It built the largest
capacity freight terminal on the U.S. West
coast in Los Angeles in 1981, following this
with terminals in New York and Osaka,
Japan. The state-of-the art facility at John
F. Kennedy International Airport, opened
only five years ago, represented a major
investment for KAL, said Choi.
Last year, KAL recorded nearly US$2.23
billion in cargo revenue, 32% of the airline’s
overall operating total, with some 42%
of freight going trans-Pacific and 27% to
‘Okay is not OK’
Ken Choi speaking about a proposed joint
venture with Chinese carrier Okay Airways
“Once we see the Korean market is
slowing down, we will be active in seeking
more markets overseas. We will step up our
activities in China, India, even Japan and
Malaysia. We cover all the world anyway. We
have a very good mixture of the market.”
KAL cargo flights go to nine cities in
North America, 10 in Europe and nine in
Southeast Asia. Service to Nagoya was added
this year alongside Tokyo and Osaka.
Allied to new marketing strategies and
Korean Air Cargo flew 8.164 billion FTKs last year, the equivalent of 8,250
flights between Seoul and Los Angeles
Europe and the Middle East, mostly made up
of high value, electronic exports. Southeast
Asian routes made up 18% of its business.
The current, sluggish expansion of the
South Korean economy does not appear
to concern Ken Choi. Single-digit growth
figures in exports for the first five months of
the year are giving way to better numbers,
somewhere around the 25% mark, he said.
These have to be taken in the context of totals
for earlier years, which Choi describes as
“almost too good.” With exports alone
growing by more than 30% in each quarter
last year, you can see what he means.
“Obviously, our home market is Korea.
But our dependence on our home market
is only 35%, which means we will not be
severely affected by any movement in the
Korean economy,” he said.
an expansion of SkyTeam Cargo activities,
KAL sees fleet rationalisation and expansion
as a key to continuing growth. Old Airbus
A300s and A400s, along with DC-10s, were
phased out long ago and this year saw the
MD-11’s final bow with KAL. “The MD-11
is still a very good airplane for many airlines,
but in order to achieve economies of scale,
we chose to have one single type, the B747,”
said Choi.
Currently, 18 B747- 400Fs are in
operation, including three that are wetleased.
They will be joined by three new
B747-400ERFs and probably eight to 10
of the 20 B747-400 conversions that KAL
has ordered under the Boeing B747-400SF
programme, pioneered by Taikoo (Xiamen)
Aircraft Engineering Co (TAECO) in China.
TAECO will convert the first plane and KAL
will handle the remaining 19 itself, selling
some to other customers. “That will make
about 29 B747s by 2009,” said Choi. “In terms
of that kind of fleet, Korean Airlines will be
second to none.”
DECEMBER 2005-JANUARY 2006 ORIENT AVIATION 37