Chairman Cho Won-tae of Hanjin Business Group, concurrently CEO of Korean Air, said, “Korea’s next government should prioritize ways of protecting the Korean aviation industry from tariffs while holding trade negotiations with the United States.”
Chairman Cho made the remarks at an interview with Bloomberg News on June 2, on the eve of the presidential election as he visited Delhi, India, to participate the 81st Annual Meeting of the International Air Transportation Association (IATA).
He said a months-long power vacuum was burdensome for corporate activities, particularly amid the uncertainties of the global economy, and as Korea has an export-oriented economic structure, the striking of a trade agreement would be helpful to raise predictability regardless of the outcomes of the presidential election.
Korean Air not only buys aircraft in large amounts from Boeing of the United States and Airbus of Europe, but also produces and supplies aircraft parts to the aircraft makers, and the Korean airline could have a direct impact on the imposition of tariffs, Bloomberg News said.
Chairman Cho said at the IATA annual meeting that the tariff issue was very important to Korean Air.
As is customary, aviation is not subject to tariffs, so they would greatly disrupt corporate activities.
The United States and China have been ratcheting up their tariff war, causing a remarked decline in cargo demand bound for the United States from China, emerging as an unfavorable factor for Korean Air.
Korean Air maintains stable passenger demand with business and first-class seat demand steady, Bloomberg said.
Chairman Cho said, if the Russia-Ukraine war comes to an end and the West’s economic sanctions against Russia are lifted, Korean Air is making preparations to open an aviation route over Russia.
Chairman Cho started his 3rd term as a member of the Board of Directors, a governing body of IATA at the annual meeting.
Chmn. Cho was first elected to his first three-year term of the IATA’s board of directors in 2019, and he was reelected for his second term in 2022, then for a 3rd term this time around.
IATA’s board members are elected among CEOs of airlines around the world based on expertise, knowledge and career accomplishments.
The board sets the direction of IATA’ activities, supervises subsidiary institutions and screens and approves the appointment of its secretary general, annual budget and member airlines’ qualifications.
Korean Air said Chmn. Cho, a key member of the board of the IATA, leading the global aviation industry, is expected to contribute to the development of the global aviation industry based on his expertise views and experiences.
The next IATA Annual Meeting is to take place in Rio de Janeiro, Brazil, in June 2026.
Korea Air Predicted to Log Good Business Performance in Q2
Korea Air forecast to post a good business performance in the second quarter of this year.
Hana Securities estimated that Korean Air will see its sales rise 1 percent year-on-year to 4,063 billion won in the second quarter of this year.
International passenger fares will decline 2 percent year-on-year to 123 won per kilometer, maintaining steady levels compared to the market, and Revenue Passenger Kilometers (RPKs) and Available Seat Kilometers (ASKs) will increase 7 percent and 8 percent, respectively, so international flight revenues are forecast to surge 6 percent, the securities company said.
High foreign currency rates and a shrinking consumption sentiment will continue and demand will likely be good on the back of the effects of long holidays in May and June and favoring tendance toward a full-service carrier (FSC).
But cargo transportation volumes and yields have declined 5 percent and 2 percent year-on-year in the wake of the tariff war between the United States and China, so the Korean airliner will likely see cargo sales drop 7 percent.
Fuel costs are predicted to drop 10 percent year-on-year, but depreciation costs and other expenses are forecast to increase, so total business costs are expected to rise 2 percent year-on-year.
Subsequently, Korean Air will see its operating profit decline 15 percent year-on-year to an estimated 353.3 billion won.
Ahn Do-hyun, researcher with Hana Securities, said, “Crude oil prices have surged in the wake of the Iran-Israel conflict, causing a negative impact to aviation share prices.”
