South Korea is currently in the spotlight with the Winter Olympics. How does Korean Air fit into this Olympic epic?
Ludovic Froidure - It is indeed a major event. In fact, our CEO was Chairman of the Korean Olympic Committee. We launched new flights between Seoul and Yangyang airport, to facilitate access to the events. We had the pleasure of welcoming many groups of athletes and sponsors. These Olympic Games are a real popular success, and we hope that this will contribute to Korea's popularity as a winter destination.
So you're counting on an "Olympic Games effect"...
L. F. - It has to be said that during periods of major sporting events, the business world often tends to limit its business travel. But the market is buoyant, and we hope that the Olympic Games, followed by the Paralympic Games, will add to the momentum and create the desire to go to Korea. It's a beautiful country, and not just Seoul: there are many other destinations to discover. Now we need to keep the flame alive.
The other news concerns the new terminal inaugurated in Seoul. What is the impact of this move within T2 for Korean Air?
L. F. - Given the growth in passenger numbers, there was an urgent need to open a new terminal at Seoul. It's done, and Korean Air moved in on 18th January last in this whole new Terminal 2with three of its partners: Delta, Air France and KLM. Ultimately, the project for the new terminal includes a second phase of extension, which will enable us to welcome our other partners. Skyteam. This is an investment of 4.5 billion. The airport's total capacity will reach 72 million passengers per year.
minimum waiting time, maximum comfort
How has the passenger journey changed?
L. F. - Within the new terminal, an area is dedicated to Korean Air's premium passengers, Business and First classes, which did not exist until now. Another area is dedicated to groups, and a third zone is dedicated to economy class passengers. First class passengers arrive at a single point that can accommodate up to thirty people, and which is similar to a concierge Passengers can check in, have a coffee and deal with their immigration forms at the same time. Our aim is to ensure minimum waiting time and maximum comfort. These passengers then access a lounge with private areas, as this is also a place for work and meetings. Two other lounges are dedicated to business class, seating 400 and 200 passengers respectively. But we haven't forgotten about economy class, which has access to transit lounges, quiet areas where sleeping kits are provided. Also in terms of service, passengers can take advantage of our 24-hour cloakroom, where they can leave their winter clothes in Seoul and collect them on their return. Finally, the new terminal is equipped with modern facilities, including baggage drop-off kiosks and an accelerated routing system to speed up travellers' journey times. On average, the journey time is cut by 20 minutes.
How is demand developing on the Paris-Seoul route?
Ludovic Froidure - Every year, some 100,000 people travel between France and Korea, all airlines combined. The post-attack period was very difficult, with a sharp drop, but last year we once again exceeded 2015 levels. The Koreans and the Japanese - because we serve no fewer than 16 destinations in Japan - are on board.
What is the profile of your customers on this line?
L. F. - Koreans account for two-thirds of the demand for our services on this CDG-Seoul route, which is marked by its seasonal nature: in August, the number of passengers is twice as high as in January, all airlines combined. This is why airlines are adapting their fleets. Half of all passengers have connections via Seoul to a final destination outside Korea. Our business class has a load factor of 70% between the two airports.
What are the key figures for the year as a whole?
L. F. - All destinations combined, Korean Air posted a fill rate of 80% worldwide. Our results are up for 2017: turnover increased by 3%, in line with global growth, and with the increase in the number of seats. We expect the same growth assumption for 2018. The last quarter of 2017 was marked by a marked increase in demand. This was due in particular to the lifting of diplomatic restrictions between China and Korea, following the installation of an anti-missile protection system. The number of international tourists to Korea fell by 25%, and the drop reached 50% among Chinese travellers. This has since been reversed, and the number of seats offered to China is up 15% in 2018. The Chinese are the number one tourists to Korea, so this is crucial.
Proud to be increasing our flight schedules to Europe
How is Korean Air's presence on the European market developing?
L. F. - We connect 13 countries in Europe. The airports of FrankfurtLondon and Paris are served daily, as is Rome more recently. At the same time, we are strengthening our schedule to several European destinations, both in terms of frequency and capacity. These include Prague, Vienna and Amsterdam, Madrid and Barcelona. Demand is following suit, and we are proud to be increasing our flight schedules in this way. In Europe, capacity is up by 5% in 2018. We hope that revenue will follow the same increase.
How do you view the rise of long-haul low-cost airlines? Is this a potential threat to the Paris-Seoul route?
Ludovic Froidure - The success of these airlines is based on optimised aircraft rotation. However, the flight time between France and Korea is 11 hours: it is therefore difficult to offer a minimum service, with no meals and little legroom... This route, like many others, is not immune. Fortunately, the traditional airlines are not sitting idly by, and prices have fallen considerably.
But Air France is refusing to enter the long-haul low-cost market...
L. F. - There are Joonthere are TransaviaBut nature abhors a vacuum: if Air France doesn't go, other competitors will. This is also true for us in Korea, where low-costs have taken 30% of the market.
What is the relationship between Korean Air and Air France?
L. F. - It's a form of 'cooptition': a mixture of cooperation and competition... Lacking theantitrust immunityBut we have the right to work intelligently between members. But we have the right to work intelligently between members. Skyteam. We exchange a certain number of seats. So the passenger has a choice, and that's our strength: two timetable options, offered within the same alliance, with the benefits of frequent flyer programmes and lounges. All this enables us to offer a very good product to business travellers.
What is the status of the announced joint venture with Delta?
Ludovic Froidure - We are in talks to start this joint venture this summer. The American authorities have approved the project, and we are now awaiting the blessing of the Korean authorities. This is an important step, because no Korean company has ever initiated a joint venture of this kind before.
What's new in the Korean Air fleet?
L. F. - Today we have a total of 176 devicesmainly Airbus and Boeing. But a little newcomer has recently made its appearance: we have received two Bombardier CS 300A further eight aircraft will arrive this year. We were the first Asian airline to welcome it. The first steps on the domestic network have been very satisfactory, so we are going to deploy it in Japan and China. It's an aircraft that guarantees a high level of comfort for passengers, and consumes less fuel. This is important both in terms of environmental protection and operational efficiency. Its capacity is better suited to certain destinations, so it will enable us to operate more frequencies while remaining profitable.
What about in-flight wi-fi?
L. F. - It's a difficult subject... With Samsung and LG, Korea is logically at the forefront, and 5G is being tested at the Olympic Games. The group Hanjinwhich includes Korean Air, also has a low-cost airline, Jinair, which offers wi-fi because its aircraft have been equipped from the outset. This is more complex for Korean Air. Installing such a system takes time, and technology evolves so quickly!
