AIR CARG O WEEK


ASIA PACIFIC


AN AIRFREIGHT TALE OF TWO KOREAS


T


“While the South Korean airfreight market faces short-term challenges due to declining freight rates, strategic mergers and acquisitions are reshaping the industry landscape, positioning key players for future growth”


he Korean peninsula is a unique geographical and political stretch of land that hosts one of the world’s most successful economies and one of


the most repressive


control economies. The airfreight market on the peninsula clearly reflects this duopoly.


The South Korean airfreight market is currently experiencing


significant transformations driven by major corporate mergers and evolving market dynamics.


Corporate M&A In December 2024, Korean Air


finalised its acquisition of Asiana


Airlines, creating one of Asia’s largest airlines. This 1.8 trillion won ($1.3 billion) deal, initiated four years before, overcame various competition concerns and regulatory hurdles. As a result, Korean Air now holds a 63.88% stake in Asiana, which will operate as a subsidiary for up to two years before full integration under the Korean Air brand. As part of the merger conditions set by the EU’s competition regulator,


Asiana’s cargo division was sold to Air Incheon for approximately 470 billion won ($342 million) in August 2024. This acquisition positions Air Incheon as South Korea’s second-largest freight carrier, significantly expanding its fleet and operational capacity.


Market dynamics The airfreight sector has faced challenges due to declining global freight rates. As of August 2023, rates had decreased for ten consecutive months, with a 41% drop compared to the same month in the previous year. This decline has adversely affected revenues for major carriers; for instance, Korean Air reported a 56% decrease in cargo revenue in the second quarter of 2023. Despite these challenges,


the market was expected


to recover, driven by the growth of e-commerce and international trade. Air Incheon’s strategic acquisition and fleet expansion reflect a proactive approach to capitalise on these emerging opportunities. In summary, while the South Korean airfreight market


faces short-term challenges due to declining freight rates, strategic mergers and acquisitions are reshaping the industry landscape, positioning key players for future growth.


European relationship deepens A successful partnership between Korean Air Cargo and Vienna Airport has extended co-operation in cargo handling to support Korean air exports to the EU. The airline has inked a four-year extension of the existing handling contract between the airport and the Korean airline has been signed and will now run until the end of 2028. The partnership with Korean Air Cargo has been in place since the airline’s first flight to Vienna in 2004. “We are delighted to announce our


continued partnership with Vienna Airport. Our co-operation has led to successful business results, and


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we are confident that this contract extension will lead to further growth and development. We look forward to providing our customers with the best possible transport services and further strengthening Vienna Airport’s position as a major hub for logistics in Eastern Europe,” says Eum Jaedong, executive vice president and head of cargo division at Korean Air Cargo. Korean Air Cargo is one of the world’s leading cargo


airlines and currently connects Vienna Airport with up to ten flights per week to international economic centres. The Korean airline operates a fleet of Boeing 747-400Fs, Boeing 747-8Fs and Boeing 777Fs. For the airline, Vienna Airport is an important gateway for electronic and pharma goods from Asia.


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