Excess
capacity is forcing Korean Air to focus on niche markets,
and seafood exports from North America are to the fore.
After uplifting 1.5m
tons last year, IATA’s latest 2015 air transport
statistics, published July 5, ranked KE as the fifth
largest carrier in the world after FedEx (7.1m), UPS
(4.5m), Emirates (2.5m) and Cathay (1.6m).
KE bolstered its freighter
network last summer with three new services, including
a Chicago-Halifax offering in August. The latter in
particular is proving highly attractive, not least because
of the Canada-Korea Free Trade Agreement (CKFTA), Canada’s
first free trade agreement in the Asia-Pacific region,
which entered into force on January 1, 2015.
“The Halifax route
from Canada has been expanded in order to meet the increased
demand of lobsters in Asian nations such as China, Japan,
and South Korea,” a spokesperson told FlyingTypers.
“Especially in
2015, the volume of lobster from Canada to Korea rose
over 50 percent compared to 2014 due to the implementation
of the FTA with Canada.”
Looking more globally,
the spokesperson said excess capacity had impacted yields
and rates for all airlines. “Korean Air focuses
on developing high yield cargo such as perishable, mail,
and pharmaceutical goods,” he added. “At
the same time, we are maintaining close ties with regular
customers to secure a base demand.”
A key contributor to
KE’s cargo revenue remains the USA/North America
region. “Due to stable freight demands on both
sides, the USA/North America region is a major market
for Korean Air,” said the spokesperson. “Even
without considering the U.S. West Coast port strike
effect, it still remains the biggest market, accounting
for over 40 percent of Korean Air’s Q1 cargo revenue.”
But the upbeat assessment
of the USA/North America region is countered by the
poor outlook on European lanes. The spokesperson said
there remained clouds over the European economy, concerns
that have been enhanced since the UK decided to leave
the European Union in its June ‘Brexit’
referendum.
“In 2016, there
is an increasing anxiety concerning the uncertainty
over the European economy,” said the spokesperson.
“The EU Commission forecasted Europe region growth
of 1.6 percent, 0.1 percent lower than the previous
year, which also impacted the air cargo market. According
to IATA’s report, Q1 traffic volume on the Europe
lane has increased approximately 2 percent compared
to last year, and it will be difficult to see any drastic
market recovery for the time being.”
The spokesperson also
predicted a gradual slowdown in the growth of air cargo
volumes in the Asia region. “There are continuous
demands for airfreight in the Southeast Asia region
with global companies building additional factories
in Vietnam,” he said. “However, global trade
slowdown seems to be much worse than expected and unfortunately,
a positive outlook seems unlikely.
“The decline in
Chinese air cargo volume bound for the Americas and
Europe region is also especially worrisome.”
As for new services and
investments for 2016, KE plans to introduce more cost
efficient B777 and B747-8 freighters, replacing older
B747s and resulting in a much younger and more cost
efficient freighter fleet. “We will utilize these
new freighters to our long haul routes first to make
the most of cost efficiency,” he said.
KE is also continuing
to expand its network to new markets such as Vietnam,
Mexico, and Peru to find new growth engines. “And
this year, we are looking at Columbia, Ecuador, and
Iran as our next target market to further expand our
network,” added the spokesperson.
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