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BUSAN -- Faced with growing competition from emerging markets and saturating profits, the nation’s flagship carrier, Korean Air, is seeking new growth engines by ramping up its little-known aerospace business, a top executive of the company said on Nov 5.
“The company has set its sights on the fast-growing aerospace business for future growth,” said Choi Ho-kyoung, managing vice president from the aerospace business division of Korean Air.
He noted that sales of the division have achieved double-digit growth for the past five years and are expected to exceed 1 trillion won ($865 million) this year for the first time, up from 920.1 billion won last year.
The nerve center of Korean Air’s aerospace business is the Tech Center, located near Busan’s Gimhae International Airport.
“Still not many Korean people know Korean Air runs the extensive manufacturing site in Busan,” said Lee Jai-choon, a general manager from the aerospace business division. “It is very rare to find a passenger airline doing the manufacturing business in the global aviation industry.”
The Korean Air Tech Center was opened in 1976 on a 710,000-square-meter plot of land for the production of the 500MD helicopter, the first helicopter manufactured in Korea based on foreign technology. As of 2015, the center manages more than 60 buildings, including hangars, warehouses and production facilities. The expansion of facilities on the site came along with business diversification from maintenance and repair services for military and commercial aircrafts to aircraft structure supplies and painting.
“The center is one of few certified global partners to offer the U.S. Army flight performance upgrades and modification services,” Lee added.
The most profitable business in the aerospace division, however, is to produce and supply aircraft parts and structures, partnering with global jet makers like Boeing and Airbus.
One of the success stories in this area is to exclusively produce Sharklet, a curved wing-tip attachment that boosts aircraft fuel efficiency, for the Airbus A320. The company won the deal back in 2010 from the French jet maker.
The center also works with Seattle-based Boeing as a first or second-tier vendor. For instance, it has supplied 737MAX winglets to Boeing since last year.
“For further growth, the company’s aerospace division has also invested in unmanned aerial vehicle system development and manufacturing,” Choi said.
Industry watchers have evaluated Korean Air as holding the most competitive edge in the UAV sector in Korea based on it having the most diversified product portfolio.
“The company expects to commercially produce the KUS-DUAS, a midrange surveillance UAV, for the Korean Army, next year,” Lee said.
The Korean Air Tech Center also completed the first test flight this year for the KUS-TR, an unmanned tilt-rotor aircraft. The center also runs projects to transform existing aircrafts into unmanned ones.
“We believe that UAVs will play a critical role in help the company achieve its goal of tripling sales in the aerospace business to 3 trillion won by 2020,” Lee added.
By Seo Jee-yeon (jyseo@heraldcorp.com)
