Air cargo growth was only marginal in 2006, and the weak trend has continued into 2007, according to Ken Choi, president of Korean Air Cargo. He attributes the weakness to intense competition on price and quality in industries such as electronics, which is leading manufacturers to squeeze as many savings as possible out of factoryand supply chain costs.
“Unless there are some killer items – such as the PC in the late 1990s, or cell phones in 2004-5, this sluggish market trend will continue,” he says. He is also concerned about what he calls “a very worrisome trend in China, where the market is experiencing an unprecedented expansion of cargo capacity.”
Despite this, Korean Air seems to be not letting up in its expansion of capacity. At the end of June it took delivery of its third B747-400 conversion, with fi ve more to come. The latest addition brings its fl eet to 21 B747-400Fs, of which 18 are production freighters, and it also continues to operate six leased B747-200Fs, something Choi says will continue for the time being.
Longer term, the carrier will be switching to 747-8s and 777Fs for its freighter fl eet, with orders for fi ve of each announced in December.
In addition, KAL took delivery of two A300-600Fs in November and February, and has deployed them to Qingdao and Xiamen, as well as using them to provide supplemental lift to Shanghai, Manila, Nagoya and Tianjin.
Choi says there are no plans to add any more of the type, however. Instead, the A300Fs are destined in due course to go into service with Grandstar, the joint venture Chinese airline that Korean is setting up with Sinotrans.
Choi says the launch date for this is still fl exible, and declines to go into further details. “Building a totally new cargo airline is not the kind of thing that can be done in a fl ash, but we are sure it is on the right track,” he says. On its schedule, Korean has been adding stops to existing freighter routes recently – adding a call in Moscow to its Frankfurt route, or stopping at Tel Aviv on the way back from Vienna for example – but otherwise has no major plans for new routes for the moment.
Choi says that Houston will be added in the coming months, but otherwise there will be a hold on new services, while the carrier waits for more freighters to join its fl eet. “But this won’t be for that long,” he says. “It is just a pause after a very rapid expansionof our freighter frequencies.”
In particular, he says he is happy with the level of service to Europe, where Korean started service to Stockholm last year. “We are already fl ying more than 30 freighters a week to Europe, which is the appropriate, given market demand. For the time being, we will be focusing on the quality side ratherthan increasing capacity,” he says.
Though KAL’s Miami freighter route, opened last July, was boosted to fi ve frequencies a week as of June, Choi says there are no immediate plans to fl y in its own right into Latin America either. “It would take time for that market to be large enough for direct freighterservices,” he says. – Peter Conway