Korean Air cargo chief talks about airline’s focus on cargo | In depth
In early February 2020, news of a novel coronavirus from the Chinese city of Wuhan began to gain prominence. At Korean Air headquarters in Seoul, a meeting was called and a decision was made: the airline would focus on cargo and start the process of converting passenger planes into temporary freighters.
The head of the airline’s cargo division, Jae Dong Eum, speaking to FlightGlobal at the recent IATA annual general meeting, said that at the time there was uncertainty as to how long of the newly discovered virus, or whether freight forwarding would be financially profitable.
“No one was sure, but we made this decision,” adds Eum, a 34-year veteran of the company.
Looking back, being an “early adopter” of the cargo conversion concept paid off big for the carrier, says Eum, who is also the airline’s senior vice president.
Cargo revenue broke quarterly records during the pandemic, helping to keep Korean Air afloat even amid a slump in passenger travel demand.
In fact, Korean Air has been in the black for eight consecutive quarters during the pandemic, largely due to the strong performance of the cargo division.
In the quarter to March 31, Korean Air was 788 billion won ($607 million) in the black at the operational level, up six times year-on-year, with revenue up 60% to 2.8 trillion. of won.
Cargo revenue, meanwhile, jumped 59% year-on-year to 2.1 trillion won.
In the fourth quarter of 2021, freight revenue hit a record high of 2.2 trillion won, helping to offset a slow recovery in passenger travel demand.
Recounting the early days of the pandemic, Eum tells FlightGlobal that the idea of a “temporary freighter” was so novel at the time that outsiders to the company viewed it in disbelief.
Thus began months of discussions and meetings — virtually, Eum points out — with South Korean aviation regulators, as well as aircraft manufacturers and other regulators in the European Union and the United States.
In the third quarter of 2020, the airline was ready with a fleet of temporary freighters to expand its cargo operations.
But while talks were underway to fly temporary freighters, Korean Air was already using the underbelly of empty planes to transport cargo.
Says Eum: “We had to convince ourselves that we have the potential… the ability [and] the experience needed to overcome changes in our business environment. We are very proud of [our work].”
To help guide the airline’s cargo focus, a special task force has been set up with representatives from various divisions.
Eum says weekly virtual meetings have taken place as the pandemic situation has evolved. The working group still meets weekly – but now the meetings are in person.
Despite the division’s strong performance during the pandemic, Eum is keenly aware of the challenges facing the freight market.
For one thing, the ongoing war in Ukraine means the airline has stopped operating passenger and cargo flights to Russia.
It also means flights to Europe can no longer traverse Trans-Siberian airspace, opting instead for a more circuitous flight path taking up to two hours longer. Eum says this will definitely increase operating costs for cargo operations to Europe.
And then there was China: the country’s continued shutdown is ‘impacting’ cargo business, says Eum who notes that China in the pre-pandemic era accounted for about a quarter of the company’s cargo volume Aerial.
In a separate media roundtable also at IATA’s annual general meeting, airline chief Walter Cho said he was considering a move for new jumbo jets launched by Airbus and Boeing, but said it would wait and see for now, citing the pending acquisition of fellow Asiana Airlines.
Eum echoed the same view, adding that Korean Air is in talks with the two aircraft manufacturers to see which next-generation freighter “would best fit into our long-term strategy.”
He ruled out narrow-body freighters, pointing out that the airline’s strength lay in trans-Pacific cargo operations. For shorter-term operations, the airline is already tapping into belly space, which Eum says is enough to meet demand at the moment. He also works with affiliate Hanjin on intermodal freight agreements.
With passenger travel returning – especially with South Korea now easing entry restrictions – Eum has a tricky job to do: balancing a focus on freight with a rebound in passenger travel.
He says the airline is slowly converting its temporary freighters into passenger configurations. This month, the last of six A330s will return to passenger operations, while the last three 777s are expected to be back in service by September.
As the airline prepares for the return of passenger travel, Eum remains confident cargo will continue to operate. In prepared comments to FlightGlobal, he says: “Our post-pandemic cargo performance can be considered a success story resulting from a combination of aggressive investments, extensive preparations and accumulated know-how in freight services. freight. Korean Air will continue to lead the industry using its advantages. »