Korean Air to Invest $9 Billion Dollars over the Next 10 Years

As most airlines around the world pinch pennies to stay alive, Korean Air announced today an ambitious long-term strategy to ensure the flag carrier’s competitiveness in the global airline industry.

Korean Air Chairman & CEO Yang Ho Cho, at the celebration of the airline’s 35th anniversary, announced plans he says will provide customers a greatly enhanced in-flight experience and instill a new corporate culture within the airline.

“For the past 35 years, we have focused on expanding our worldwide route network and fleet so that, combined with our SkyTeam alliance, we can take anyone and anything to anywhere, anytime. Now it is time we redefine our airline to our customers and ourselves, and to grow into a vibrant, spirited organization,” Mr. Cho says.

He adds Korean Air’s new vision is ‘To Be a Respected Leader in the World Airline Community’ and he calls it ‘Excellence in Flight’. He also says that its three parts, when implemented over the next 10 years, will total more than $9 billion in the long-term investment. The three sectors he refers to are:

SERVICE EXCELLENCE

Korean Air has retained Landor, one of the most respected corporate identity crafters to build new CI. The new CI, still in process, will be based on the two key concepts, At Home and Spirit of New Korea. 

“‘At Home’ means that Korean Air will keep our passengers comfortable both in flight and in airports all over the globe, making Korean Air their home, wherever they are and wherever they go,” Mr. Cho explains. He adds that the ‘Spirit of New Korea’ showcases the airline’s dedication to superior performance and hard work – which mirrors the strong vitality of Korea and cosmopolitan way of life at the same time. 

Korean Air is also creating a fresh cabin environment to offer its passengers superb in-flight experiences. Landor is redesigning aircraft interiors and giving the airline a fresh, hip look from the carpets to the catering. The project is to be completed by year 2006 and Korean Air estimates the cost of this three-year-long undertaking to be around $30 million. The airline is also consulting with top European fashion designers about a new uniform for its flight attendants. 

In addition, Korean Air is introducing First Class ‘Cocoon’ seats and Premium Business Class Seats as well as Audio Video on Demand (AVOD), which will be made available in all classes including economy. The First Class ‘Cocoon’ Seat is an 81-inch long sleeper seat, which features a massage function, an AVOD system with a 15-inch LCD screen and a partition that protects one’s privacy from a passenger sitting next to him/her. The Premium Business Class Seat is an upgraded version of its current Business Class Seat and it allows 170 degree recline with a similar AVOD system. Its key concept is a ‘Business class with First Class amenities ’. The AVOD, which is being installed in all three classes, will give a choice of 36 movie channels and a selection from more than 1,000 music choices. Korean Air is also making Internet services available in all classes as another way to enhance passengers’ in-flight experiences.

INNOVATIVE EXCELLENCE

Mr. Cho says that in order to stay ahead of competitors, the airline must be nimble and be able to adapt to changes quickly. To meet that need, the airline is investing millions into new technologies and programs designed to inspire its workforce.

Korean Air has always been IT-savvy and recently announced new IT partnerships that will lower operating costs by 10%. Outsourcing contracts with IBM and Hanjin (the carrier’s parent company) are valued at more than $200 million. 

Korean Air was also the first airline in the world to introduce a $2 million all-internet-based cargo tracking system. This system, constantly being refined, is a real benefit for customers of the cargo giant. Korean Air expects to invest approximately $1.9 million over the next 10 years in new IT programs that include facilitation of Infrastructures and E-biz environment, purchasing of new software, and etc. 

OPERATIONAL EXCELLENCE

Korean Air continues its Operational Excellence program into the 21st century with a record-breaking fleet acquisitions and modernization plan. Korean Air is one of Asia’s first airlines to order the double-decker Airbus 380, signing for five with three options. The airline has also ordered additional seven Boeing 777s with two more 747 freighter jets and will be adding new Boeing 737s for its short haul routes. In all, Korean Air’s entire fleet will be comprised of only five aircraft types. Mr. Cho says that this is less costly to maintain, while carrying passengers and cargo with the most modern equipment. New aircraft investments total approximately $6.6 billion over the next 10 years.

Meanwhile, Incheon International Airport has been one of Korean Air’s greatest strategic advantages. From a catering operation that serves more than 20 airlines to an elegant $150 million Hyatt Regency that has more than 500 guest rooms, KAL has invested several hundred million dollars to make sure that Incheon is an attractive asset to the airline and to the region. From passengers’ standpoint, Korean Air’s Incheon lounges are remarkable with everything a business traveler would ever want and more. Incheon’s 24-hour operation provides a great connection to anywhere in Asia, especially to Mainland China, which is only a few hours away. In fact, over 40 major cities can be reached with less than a four-hour flight from Incheon and over 1 billion people reside within 1,000 km from it. With Incheon’s emergence as a strong hub of the Northeast Asia, Korean Air expects to provide a greater connection to a larger number of travelers flying between Asia and the West.

Mr. Cho says that he is inspired by the industry challenges and the quality of his people. He is applying much of his western education and engineering background to Korean Air by creating interlocking systems and calling for “out of the box” thinking. “It’s not enough to be a great Korean airline anymore,” Mr. Cho explains. “We are working on a global level and have witnessed our industry’s volatility caused by factors way beyond Korea. 

“Customer loyalty is one of the keys to our future success. We gain their loyalty by offering a great product, and it is our people who make that possible. These are our goals and I am confident of our success.”