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Korean Air Anticipates U.S. Corporate Growth with New Terminal & Delta JV

By Michael B. Baker / January 30, 2018 / Contact Reporter
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With a new terminal for its operations in Seoul and final approval nearing for its joint venture with Delta, Korean Air hopes to win a significant new chunk of U.S. corporate business travel share this year.

In January, South Korea's Incheon International Airport began service out of its new 7.4 million square-foot Terminal 2, which is serving Korean Air and SkyTeam partners Delta and Air France-KLM exclusively. The terminal does not immediately enable more flights out of Incheon—the number of runways remain the same, and planes still must navigate around North Korean airspace to the airport's immediate north—but it does ease up gate congestion, allow for better on-time performance and make transfers through Seoul a more pleasant experience overall, Korean Air EVP Keehong Woo said.

Transfers with Delta can be much tighter, he said. Korean Air previously operated out of Terminal 1, and Delta was in the concourse, requiring a minimum of 90 minutes for connecting flights. Now that both carriers are in the same terminal, that time is cut in half. "With [Tokyo] Narita, China, Taipei or Hong Kong, we can compete more effectively," he said.

Terminal 2 also centralizes security and immigration checks in two sections with high-tech screening devices. Airport officials estimate that will cut transit time from check-in by about 20 minutes compared with Terminal 1.


We have a very extensive network but with limited sales capabilities in the United States. .... With the help of Delta, we can capture a lot of that [corporate] segment."

Korean Air's Keehong Woo

The amenities of the airport itself also will attract new business, Woo said. Two lounges for Prestige Class travelers can seat 600, and there also are smaller, exclusive lounges for first class passengers and top-tier mileage program members. The carrier already had been upgrading its onboard experience for its high-tier passengers, including introduction a few years ago of its Prestige Suites to select long-haul aircraft.

For general passengers, the terminal has introduced high-tech diversions like a virtual gym, with games that promote movement; a cafe that serves coffee and tea prepared by a robotic arm; a performance hall for cultural events; and a lounge area with prone seating for nappers. "I don't know how many people change their airlines because of a new terminal, but we have new lounges, especially for business and first class; new food; and a new style," Woo said. "I think it makes a difference."

Korean Air's focus is on growing premium class travel, as its economy class demand growth is solid, Woo said. Demand in terms of number of passengers to Korea last year rose by between 9 percent and 10 percent, but that was mostly leisure growth, he said. Business travel was flat.

While Korean Air's share of Korean corporate travel is "very high," the JV with Delta will add much needed sales muscle to boost international premium business, he said.

"We have a very extensive network but with limited sales capabilities in the United States compared with our network, our product and sales capacity," Woo said. "With the help of Delta, we can capture a lot of that [corporate] segment, and Delta can compete in the transpacific markets."

The U.S. approved the JV in November, and Woo hopes the Korean government will approve it in the first quarter of this year. It's taken a little longer on the Korean side because it is the nation's first time dealing with an airline JV, he said.

Korean Air has been fielding discussions about other JVs that would increase connectivity out of Seoul, including Air France-KLM, Malaysia Airlines, Garuda Indonesia and some Chinese carriers, according to Woo. Finalizing the Delta JV is the top priority, however, so any other JVs would come after that is done, he said.

Room for growth may follow soon after. Work is underway for further expansion of Terminal 2, and discussions about enabling more slots out of Incheon are underway, Woo said. The next major phase should be ready in about five years, he said.

Global tensions with North Korea have formed a slight obstacle to traffic. While South Koreans generally are accustomed to bold pronouncements and threats from their northern neighbor, the rest of the world at times has a more dramatic reaction. As the bluster between North Korean Supreme Leader Kim Jong-un and U.S. President Donald Trump intensified in recent months, it caused a small impact to traffic from Japan, Europe and the U.S., but that tends to ebb and flow, Woo said. "Now, North Korea is talking with South Korea to come to the Olympics, so everything is good—no threat," he said.

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