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.
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.