Travel Daily talks exclusively to Kim Jang Soo, Vice President, Korean Air, Regional HQ, Southeast Asia & Oceania, on the national carrier’s expansion plans….
Q) What is Korean Air’s business goal in 2012 and what opportunities and challenges are you facing?
Korean Air is targeting revenues of KRW12.82 trillion (US$11.9 billion) and an operating profit of KRW820 billion this year.
The financial crisis in Europe as well as skyrocketing oil prices have lowered the visibility of the markets, making it difficult to forecast the direction of the global economy. Under these uncertain circumstances, we will pursue growth of quality rather than quantity by enhancing our adaptability to the rapidly changing global business environment, strengthening our communication ability as well as reinforcing our competitiveness in the global market.
We see opportunities of growth in two major areas: expanding the network of our A380 services, and extending our reach to the fast growing Asian market.
We operate one of the most spacious A380 in the industry and dedicate the whole upper deck of our A380 to Prestige Class – a symbol of our efforts to strengthen our position as a leading global premium carrier. While the global economy is slowing down, the Asian market is going strong. Our A380 is expected to become the best marketing tool to help us capture opportunities arising from the Asian premium air travel demand.
The rapidly growing Asian travel demand will also bring us growth opportunities in the upcoming years. Korean Air currently operates to over 19 destinations in Southeast Asia and we will initiate an operation to Yangon later this year.
However, rising oil prices as well as the current financial uncertainty in Europe still remain as key challenges that we have to overcome, as they impact on the decrease in demand for business travel. As difficult times come as a cycle, we are trying to leverage this as opportunity to restructure our business and at the same time, make timely investments such as adopting A380, environmental-friendly next generation aircraft.
Q) Korean Air launched its A380 services to Frankfurt recently (25 March) with its fifth superjumbo. Which other destinations are you planning to add to your A380 network as the next five aircraft arrive?
Korean Air currently operates its A380 aircraft to New York, Los Angeles, Hong Kong and Frankfurt. We are keen to expand further our A380 service, but the fact is there aren’t many airports in the world that are readily equipped to handle the A380 aircraft. Having said that, we do anticipate that the number of airports capable of handling the A380 will steadily increase. We will take into consideration our fleet status, the fluctuation of air traffic demand and expansion of capable airports, and will further plan to either introduce new A380 routes or to increase capacity on current routes.
Q) With just 407 seats, Korean Air has the lowest capacity of any A380. Is the decision to operate an expanded business class paying off, or do you intend to change the A380 cabin configuration for further deliveries?
Korean Air’s A380 currently operates with 407 seats – 131 fewer seats than the A380s operated by some other airlines. From the passenger’s point of view, the tremendous amounts of space, comfort and unique amenities make Korean Air’s A380 stand out as an industry leader. The flight has now become part of the journey itself and is no longer just a way of crossing large distances. Taking into consideration the valid needs of long distance travellers, travel has now become more enjoyable again with the introduction of the lounges and the Duty Free Showcase. Response from the industry to Korean Air’s A380 product has been very positive so far.
Korean Air is experiencing a very healthy level of demand for premium class travel. We are based in a major economic centre and connect with the world’s major business centres. It is natural that we would choose an aircraft which would allow us to capture this demand and further develop and expand this core customer base. The A380 is the perfect tool for this.
Korean Air has ordered a total of 10 A380 aircraft, five of which have been delivered to us so far. From the remaining five, one will be delivered this year and the remaining four by 2014. The configuration of our further A380s will remain the same as the current ones.
Q) Can you give us an overview of your fleet expansion/renewal plans in the months and years ahead?
As of April 2012, Korean Air operates a total of 145 aircraft in its fleet, including 120 passenger aircraft. By 2018, we will have an additional 48 passenger aircraft. This year we will take delivery of one A380, a Boeing 777-300ER and four B737-800/900ERs.
Also, a total of 12 B777-300ERs and A330 aircraft will be added to Korean Air’s fleet in the future.
On the other hand, Korean Air will continue to manage its quality of fleet by gradually phasing out part of current aircraft with low operational efficiency such as B747-400s and A300-600s.
Q) You recently sealed two interline agreements in the US, with JetBlue and Virgin America. Are you looking to tie-up such agreements in other regions?
It is always our goal to provide wider range of network and services to our customers. In view of this, Korean Air will continue to expand its partnership with the world’s renowned airlines that offer seamless connection, stable operation as well as quality service to customers around the world.
