A Korean Air passenger jet prepares for takeoff on the domestic runway at Gimpo International Airport in Gangseo-gu, Seoul. News1
The integrated Korean Air (003490) is expanding its air cargo business, which weakened as it pursued the merger with Asiana Airlines (020560). The company is renovating Cargo Terminal 1 at Incheon International Airport by September to increase annual cargo handling volume by 25%. Korean Air is also upgrading the cargo terminal at New York’s JFK Airport, its North American logistics hub, with advanced facilities to strengthen the transport of high-value specialty cargo such as semiconductors.
Ahead of its December integration with Asiana Airlines, Korean Air is seeking synergy effects not only in passenger but also in cargo operations, with expected benefits including cost savings through joint terminal operations. Korean Air estimated that integration costs with Asiana Airlines would reach 1 trillion won, but projected it would reap effects worth about 300 billion won annually through such synergies.
According to the aviation industry on Saturday, Korean Air plans to complete the renovation of Incheon Airport’s Cargo Terminal 1 in September. Once the work is finished, the annual cargo handling volume at the Incheon cargo terminal will increase by 25%.
This renovation is a large-scale cargo infrastructure improvement project that Korean Air is pursuing in preparation for the period after the Asiana integration. The company has modernized aging facilities built in the early days of Incheon Airport’s opening and introduced a smart logistics system to significantly expand cargo handling capacity.
Korean Air has already completed the renewal of its refrigerated and frozen warehouses for specialty cargo transport, and is now carrying out renovation of the ETV, a cargo terminal equipment. The ETV is a lift-type mobile device that lifts and moves cargo at the terminal, and Korean Air is building a smart logistics system by applying automation functions to ETV units No. 1 through No. 4.
Korean Air is also pursuing modernization of its dedicated cargo terminal at New York’s JFK Airport, a representative U.S. gateway. To this end, in January this year it commissioned the design of an automation system from Lödige Industries, a German logistics automation specialist. Korean Air will install two ETVs equipped with automation systems, began modernizing refrigeration facilities this month, and plans to complete the work by July next year. In particular, the company plans to actively expand its attraction of high-value specialty cargo such as semiconductors by newly installing or remodeling refrigerated and frozen warehouses.
Once the overhaul of the logistics terminals at Incheon Airport and New York’s JFK Airport is completed, the integrated Korean Air expects its global cargo transport business to contribute substantially to earnings. Korean Air will complete its integration with Asiana Airlines in December, allowing it to grow in scale not only in passenger but also in cargo transport, while also anticipating synergies such as reduced operating costs. Asiana Airlines sold its cargo business to Air Zeta (formerly Air Incheon) for the merger, but continues its belly cargo business, which utilizes the cargo holds of passenger aircraft.
Asiana Airlines’ monthly belly cargo transport volume increased from around 14,000 tons last year to 16,399 tons in May this year. Recently, it has been expanding belly cargo sales on routes such as Eastern Europe and Central Asia to maximize transport cargo. The utilization efficiency of Korean Air, which operates a total of 23 dedicated freighters, and the Incheon Airport logistics terminal equipped with automated facilities, is bound to rise significantly.
In addition, Korean Air has high expectations for the Incheon Airport cargo terminal as a semiconductor logistics hub. Semiconductors are high value-added and require rapid transport, so they are mainly shipped by air rather than by sea. In May, Korea’s semiconductor exports reached 37.16 billion dollars, a record monthly high.
As the semiconductor supercycle is expected to continue for two to three years, demand for air cargo transport is also bound to grow steadily. The Baltic Air Freight Index (BAI) has already surged 35.3 percent, from 2007 at the beginning of March this year to 2715 on the 15th of this month.
The industry expects that the cargo business will play a role in supporting and driving earnings for Korean Air at a time when the company faces warning signs for profitability management due to high exchange rates and high oil prices. In fact, Korean Air’s cargo business revenue is projected to grow from 1.091 trillion won in the first quarter this year to 1.386 trillion won in the third quarter and 1.613 trillion won in the fourth quarter. This year’s cargo transport revenue forecast is 5.333 trillion won, a 21 percent increase from last year (4.409 trillion won).
“We expect that through the renovation of the Incheon and New York cargo terminals, we will be able to maximize global logistics operational efficiency and further strengthen our world-class logistics competitiveness,” a Korean Air official said.
Meanwhile, Korean Air held a shareholder briefing on Saturday and announced that integration costs with Asiana Airlines would reach up to 1 trillion won. It projected that full integration synergies would materialize from 2029.
According to Korean Air’s analysis, the integration synergy effect between the two companies amounts to 300 billion won annually, which is expected to offset costs by the end of 2028 or in 2029 at the earliest.
Korean Air plans to launch the integrated Korean Air by December 17 this year, becoming a global top-10 mega carrier with revenue of 23 trillion won, 230 aircraft, and about 28,000 employees. Specifically, it has set goals of entering the global top 15 in the passenger sector and the global top 5 in the cargo sector.
