Korean Air

Emerging Africa-Asia market continues to grow with Korean Air service to Nairobi from Seoul

Connections between Africa and Asia will grow from 21-Jun-2012 with Korean Air's seasonal three-times weekly service between Seoul and Nairobi, Kenya. The hub-to-hub flight will link Korean Air's Asian-focused hub to the extensive and growing African hub of fellow SkyTeam carrier Kenya Airways, which plans to serve every African capital city within five years.

The Africa-Asia market will boom this decade, according to Airbus projections that see Africa having the highest percentage growth of traffic to or from Asia. Korean Air's route follows charter services to Nairobi as well as the signing in Dec-2011 of a trade agreement between South Korea and Kenya.

Korean Air will be the only Asian airline to serve East Africa, which geographically and combined with a partner's hub allows for greater traffic feed across Africa. Asian airlines have predominantly focused on serving South Africa while African carriers serve multiple Asian points.

Airlines and airports feeling impact of global economic weakness with continued freight pressures

Airlines and airports are feeling the impact of the current global economic weakness and declining consumer spending in Europe, which is having a noticeable impact on air cargo volumes. Cargo traffic, which generated USD66 billion in revenue in 2010, has declined every month since May-2011, according to IATA upon the release of its Oct-2011 traffic results, with a 4.7% year-on-year reduction in cargo demand in Oct-2011 amid reduced manufacturing confidence and businesses switching to slower modes of transport.

“Cargo is the story of the month. Since mid-year the market has shrunk by almost 5% and this is far greater than the 1% fall in world trade. Air freight is among the first sectors to suffer when businesses confidence declines,” IATA director general and CEO Tony Tyler said. Meanwhile, Boeing CEO Jim McNerney separately stated the company has seen a softening of freight demand in recent months, describing the freight market as a “watch item”.

Asiana to focus over medium term on expansion of long-haul network and fleet

Asiana Airlines has unveiled a new medium-term business plan which envisions capacity and fleet growth of 25% over the next four years as the South Korean carrier aims to break into the top 10 global airline rankings. Asiana plans to focus over the medium term on expanding its relatively small long-haul network as opportunities for short-haul expansion become more limited due to bilateral constraints and increasing competition from LCCs.

Asiana’s medium-term fleet plan includes 17 additional aircraft, taking the fleet from 71 aircraft currently to 83 aircraft by the end of 2013 and 88 by the end of 2015. Narrowbody passenger, widebody passenger and freighter aircraft will all be added over the next four years. But the biggest capacity growth will be seen in the widebody passenger segment, which will grow from 32 to 40 aircraft.

The additional widebodies, including six A380s, are designed to give Asiana an opportunity to build up its long-haul network and close the gap with its Asian peers, which have much bigger operations in North America and Europe.

Weak Korean won, increased fuel costs and soft cargo demand erodes Korean Air's bottom line in 3Q

South Korea’s largest airline Korean Air Lines swung to a third quarter (three months to Sep-2011) net loss as increased fuel costs, a weak Korean won and soft cargo demand eroded the carrier’s bottom-line. The result highlights how closely tied the carrier is to currency fluctuations and cargo demand from Europe and the US, which is expected to remain sluggish throughout 4Q2011 and into 2012 as a consequence of Europe's debt crisis and weak demand in developed economies.

Korean Air senior VP Cho Won Tae earlier this month noted that while revenue in 2011 is relatively on-par to 2010 levels, costs have surged due to increased fuel costs. Korean Air, and its peer in the South Korean market, Asiana Airlines, are highly exposed to weakness in the freight market and have echoed comments made by North Asian peers such as China Southern, Cathay Pacific and China Airlines in noting that cargo has been weak in 2011, with freight demand failing to meet expectations. Korean Air has stated it expects the situation in 2012 "to be worse".

Asiana Airlines operating profit falls sharply in 2Q2011, outlook uncertain

Asiana Airlines, South Korea’s second largest airline by revenue after Korean Air, reported a sharp reduction in operating profit in the three months ended Jun-2011 (2Q2011) as a result of the combined impact of the 11-Mar-2011 Japan earthquake and tsunami and high oil prices. The carrier however returned to the black at the net level in the quarter.

Emirates and Lufthansa growing strongly this summer: World's biggest airlines rankings for August

Lufthansa and Emirates are the fastest growing carriers of the global top ten, increasing their capacity (ASKs) by 12.4% and 8.1% year-on-year, respectively. Delta remains the world's leading carrier by this measure, followed by American Airlines and United Airlines. Combined, United-Continental is roughly 3.3% bigger than Delta by systemwide ASKs.