Airline provides air conveyance services for riders or cargo. There are several characteristics in air hose industry. First, the air hose industries produce both fixed and seeable trade goods and services together. The fixed trade goods include seats, lading compartments, aeroplane, and installations in the plane. The services they provide include booking a flight, embarkation services, service that flight attenders supply, and covering with the lading after the flight.
Second, promptness is of import in air hose industry. Almost every regular scheduled air hose has a responsibility to supply a service, which is allowed by authorities, as planned except when the conditions status is unusual or unusual incident happens.
Third, in air hose industry there is the simultaneousness of production and gross revenues. The seating and lading room of the mounting infinite, unlike the typical maker ‘s merchandises, can non be instantly re-stocked.
Last but non least, it has comparatively low production flexibleness. In the instance of regular conveyance aircraft, flight figure and the figure of flights are pre-determined, so if the riders increase or diminish dramatically, it is difficult to modulate the sum of the supply. Shortly, in air hose concern, supply is hard to set flexibly to run into the demand.
1-2. Current position in the air hose concern
As U.S. loosened some ordinance about come ining air conveyance industry in 1978, planetary air conveyance industry has progressed the liberalisation of air conveyance, the enlargement of private sector engagement in air hose and airdrome operations, and the individual air power market in each specific countries quickly. In add-on, as big aircraft has been commercialized, the development of aviation-related engineering to the air conveyance market has been working as an of import parametric quantity for the reorganisation.
Meanwhile, the domestic air conveyance industry has been focused on Incheon International Airport to be the centre hub airdromes in Asia. Hub airdrome means an airdrome selected by air hoses for the direction scheme that is used as a cardinal airdrome. For illustration, if there is a hub airdrome of Northeast Asia, the United States and Europe riders arrived in the big aircraft in the hub airdrome to reassign to another flight to head Japan or China. Shortly a hub airdrome is a topographic point where riders transit. The topographic point where these sorts of aircrafts are gathered is called the centre hub airdromes. However, due to some impairment of the environment, it is traveling through some trouble these yearss.
1-3. International Business Strategy in Airline industry
Normally air hose concern is taking a planetary scheme which means the house views the universe as individual market place. The primary end would be to make standardised merchandises. However the standardised merchandises do n’t intend the house should utilize individual selling scheme or uniformed services. Even though consumers for air hose trade goods do n’t truly affected by marketing scheme than other maker ‘s merchandises or services, air hose houses have to see tonss of civilization differences and planetary issues since the service itself is literally winging all over the universe. Since the nutrient, the linguistic communication, the penchant and so on are different from state to state, they have to maintain in head that fact.
2. Korean Air
Korean Air or known as Daehan Hangggong is one of the largest air hose company in Asia and really the largest company in South Korea. One of the chief services that Korean Air provides are transit of riders, lading, care, and preparation service, which is the 96 % of its gross ( 90,548 hundred million won ) and the staying per centums are Limousine, Hotel, in-flight service, among others holding as a entire gross of 93,937 100 1000000s ( 2009 ) . Korean Air serves passenger transit and lading service in 130 metropoliss in 45 states doing them of the top 20 air hoses in the universe, and being top ranked for international cargo transporting. It has transport 20,41 million riders ( 12.89million international riders and 7,52million domestic riders ) . Korean Air has really entire of 19,178 employees, which the high per centums of workers are concentrated in cabin crew ( 26 % ) , Engineering ( 27 % ) , and in disposal ( 24 % ) . ( Appendix 1 )
The chief motto and mission statement of Korean Air is “ Excellence in Flight ” . Korean Air has been accomplishing its mission statement by giving a good service being one of them holding SKYPASS. Skypass is the frequent circular plan which they give to the riders multiple benefits like free tickets, hotel price reductions, among others, if the rider flies a certain sum of stat mis per twelvemonth. Korean Air besides gives 4 types of first categories which Kosmo Suite and Prestige Sleeper category can stretch the place into 180 grades, doing it more private and besides presenting specials nutrient. To be excellence in flight and being a top ranked air hose they have to carry through with Operational excellence, service excellence, and advanced excellence.
In North America, Korea air hose is the largest air hose to Asia and their chief challenger is Asiana air hose which is another Korean company. In order to hold a better operational and service excellence, Korean Air belongs to the Skyteam which is the universe 2nd largest air hose confederation. By doing some particular confederation in certain paths, riders can gain stat mis even though if they are non winging Korean Air.
Korean Air ‘s International Business Strategy
We will concentrate on rider division, because gross revenues of other concern except lading and rider are really little and cargo concern is the best in the universe. Passenger concern has some issues which Korean Air should pay attending, so analysis is concentrated on rider concern. For look intoing Korean Air ‘s international concern, we used value concatenation analysis. Based on value concatenation, a concern consists of two activities, supportive and primary activities. Supportive activities include maps which support company ‘s chief activity such as Firm Infrastructure, Human Resource Management, Finance and etc. Primary activities are the house ‘s major activities to bring forth merchandises or service. We looked into each sector and analyzed international concern in each sector.
3-1. International Business Strategy in Supportive Activities
Assorted organisational construction
Korean Air has systematic organisational construction as it is shown in the affiliated chart. ( Appendix 2 )[ 1 ]As we can see in chart, divisions and maps are assorted. It has tonss of divisions harmonizing to their maps what to make. These are divided by what they are concentrating such as rider division or lading division. Because it is international company, it has a section of International Affairs. Besides it has a Cabin Service division which is aimed to develop flight attenders to supply high quality service. Head Office in Korea has many power and control international concern.
Internal and external hazard direction methods
Since air hose industries are influenced by oil monetary value and currency rather sensitively, Korean Air has operated hazard direction methods internally and externally to fudge the possible hazard.[ 2 ]In footings of internal hazard direction Korean Air has four hedge methods ( Netting, Matching, Leading, Lagging ) . On the other manus, sing the hazard of oil monetary value it is enforced to utilize derivative merchandises ( e.g. Forward, Swap, and Option ) as a hedge to cut down one-year oil monetary values below the degree of hazard tolerance. Besides, by utilizing same derivative merchandises sing the hazard of currency, hedge is runing against certain portion of exposure. Now, Korean Air has three hazard direction directors who are wholly in charge of the above hazard direction.
Korean Air has about one hundred of abroad subdivision offices all over the universe. In the abroad subdivision office, local people can do a reserve their flight agenda and publish the ticket. This office focuses wholly on pulling foreign clients and supplying convenient services. Therefore, they are taking on active portion in assorted selling schemes.
3-2. International Business Strategy in Primary Activities
Find new markets actively and reenforce planetary web
Korean Air offers regular flights to 104 metropoliss in the universe and attempts to develop new markets. In 2009, Korean Air launched new flights to some possible markets such as Xi’an, Mudanjiang in China and Shizuoka in Japan and not regular flights to a 3rd state by spread outing the fifth freedom rights of the air hose in Japan. As following new growing engines, the company decided to travel into South America, the Middle East and Africa and set up service and gross revenues offices.[ 3 ]Besides, as aeronautical understandings are liberalized among states, the company is happening new flights actively than earlier. In the instance of flights to the Americas, Korean Air has the largest flights among Asiatic Airline companies and secures model for long-distance flights after liberalisation understandings among states.
Furthermore, by utilizing ‘Codeshare ‘ with allied air hoses, Korean Air strengthens planetary web to make planetary demands. ‘Codeshare ‘ is an understanding where an air hose buys infinite on another air hose and markets the excess infinite as its ain. Korean Air belongs to SKYteam, an confederation of planetary air hoses. ( Appendix 3 ) Korean Air and the air hoses in SKYteam cooperate with each other to increase path webs without disbursement excess cost of running the whole service through ‘Codeshare ‘ ( entire 24 ) .[ 4 ]
Manage flight programs sing planetary economic system and market state of affairs
An air hose industry is really sensitive to planetary events and alterations, so Korean Air controls flight supply flexibly. The company can better the profitableness through some activities. For illustration, in 2009, Korean Air reduced some flights to China and Oceania in which demand for circuits decreased and increased flights to the Americas, Japan and CIS which demand increased because of visa release, a strong hankering and interchange of economic system.[ 5 ]Although there were the fiscal crisis and the grippe, it overcame those obstructions good plenty.
Besides, the company continuously improves flight agenda expeditiously. It changes a flight list and a timeline, sing the features of major riders. For illustration, in midnight service between Incheon and Singapore, the house found that most of riders are business communities who go on a concern trip. Therefore it changed a plane which had more broad infinite between each economic system category seats for riders to loosen up and alter the going and arrival clip for riders to get away traffic jam in Seoul.
3 ) Based on dickering power, sell the tickets
Korean Air has two ways to sell the tickets, direct manner and indirect manner. The company sells the tickets in international offices, airdrome offices and online straight. Particularly, through ain online reserve system, TOPAS ( Total Passenger Service System ) , it sells tickets on 9 sites by parts. It can acquire synergy consequence with other concerns that Korean Air is supplying, such as Hotel or Limousine concern because people can besides reserve hotel and limousine at one time.
Besides, Korean Air uses indirect gross revenues through travel bureaus both at place and abroad. The company contracts franchise with travel bureaus and gives some discounts depending on their gross revenues. Travel bureaus are connected to TOPAS and utilize it. Sometimes there is a job. Korean Air forces gross revenues to little travel bureaus and if an bureau does non carry through that, it can non acquire any inducement or committee. Particularly, Korean bureaus both in and out of the state have some problem like this.
Provide high quality service
a- Airport Service: Passenger utilizing Korean Air can utilize lounge service in assorted international airdromes, because Korean Air portions over 400 sofas with Alliess of SKYteam. Besides, the company helps riders ‘ efficient transportation by check-in service. A staff carries out apportioning place, publishing get oning base on balls and checking in luggage to the concluding finish.
a- In-flight Service: Korean Air has following in-flight services to fulfill assorted riders with the finest and province of the art seats. First, it gives trim amusement service for international people such as films, music, magazines and newspaper. Second, it provides trim repast service. Peoples can order single and particular repasts before 24 hours. Besides, it provides disconnected repast service. There are vegetarian, medical, spiritual repasts and baby or babe repasts. Last, It has so alone service, ‘Flying Art Embassador ‘ . This is celebrated museum usher service. The company hires civilization or museum professionals as crews and the crews give some information about museums in the finish. It is one manner to better the company ‘s premium image.[ 6 ]
5 ) Practice rank plan and strategic confederations as a selling
Korean Air uses rank system for client trueness, and contracts strategic confederations with other concern on and offline as one major selling scheme. Besides, for the premium image and distinction from rivals, it promotes and puts an advertizement.
a- Skypass: Skypass is a rank system that Korean Air provides. The company gives particular intervention to often circulars in the universe. In 2006, there were 13,000 1000 members. Members can gain milage when they travel and purchase fillips flight tickets with their milage they have collected. Besides, Korean Air provides some service such check-in counter merely for VIP and sofa, free-baggage service for residuary seats.
a- Partnership ( Alliance ) : Korean Air has many partnerships with many houses. First, Korean Air expands ‘Codeshare ‘ between Skyteam Alliess, and promotes ain trade name to other states. Second, riders can utilize renter-car, hotel, theme-park, infirmary, eating house and mercantile establishment with discounted monetary values, because of partnership. Third, Korean Air and some spouse operate online site together. These spouses are going sites and sometimes other air hose companies. For illustration, Korean Air will make on-line travel bureau in coaction with Asiana air hose.
a- Culture Selling: To be a premium air hose, since 2007, it uses civilization selling. ‘Museum sponsorship ‘ and ‘Flying Art Embassador ‘ are good illustrations. Through sponsorship, it supports civilization exchange between Korea and Europe and Korean linguistic communication service in museums such as Louvre and the professional crews give information of the museums and the plants to the riders.
a- Ads and Promotion: In air hose industry, bulk of riders are sensitive to safety. Therefore, Korean Air emphasizes safety by be aftering strategic ads. In the ads, a immense aeroplane is in the centre and the company uses a simple message to give an image of unagitated and safety. Besides, the theoretical account is an employee or an ordinary individual alternatively of star so consumers can experience more comfy and as a consequence the dependability of the company would increase. Furthermore, Korean Air continues to denote the awards, new seats, service and company ‘s good intelligence through mass media such as magazines, Television and etc.
Korean Air operates assorted selling schemes, but there is a bound. Because Korean travellers occupy the highest part of whole riders of Korean Air, the company ‘s selling has chiefly focused on Korean. Recently, in Korea, the house started YOUTH selling for 20s after visa release plan between Korea and USA was signed.[ 7 ]On the other manus, in international market, it has performed more individual selling to better trade name consciousness and image. However marketing schemes by part are non successful plenty yet.
1 ) Increasing theodolite riders
As the consequence of the addition of transit riders who use Incheon International Airport and Korean Air, the embarkation rate has been increased. Theodolite riders who use Korean Air have been increased for old ages, but since 2008 the sum increases faster than of all time. ( Appendix 4 ) While riders who departure from Korea decreased in 2008~2009 ( due to some economic recession and increased exchange rate ) , transit riders were responsible for the loss and from this twelvemonth, the theodolite riders will play an of import function to increase net income borders. Normally March, April and November are low seasons for air hose concern, but this twelvemonth the state of affairs is different. Korean Air is anticipating the embarkation rate to make 77 % even in March.[ 8 ]This outlook is impossible without theodolite riders. The figure of theodolite riders tended to increase for a long clip. In 2005~2007, there were Economic roar and decreased won / dollar exchange rate and due to those factors riders who departure from Korea increased. So at that clip Korean Air did n’t truly necessitate to pull transit riders. However the tendency of the rapid lessening figure of riders who is go forthing Korea since 2008, the air hose starts transportation selling with Incheon International Airport.
Thankss to Incheon airdrome, 30 % of the international rider demand consists of theodolite riders in 2009. ( Appendix 5 ) One of the chief ground investors do non like Korean Air in yesteryear was that the gross construction is depend wholly on the macro variables such as exchange rates and oil monetary values, so the company ca n’t command anything. But now Korean Air can make something. They can command the demand mix. Get downing this twelvemonth, if riders who departure addition and there are no adequate seats, they can merely sell less ticket to pass through riders and in the low seasons they can increase the seats for theodolite riders. The gross construction will be stable so exchange rates and oil monetary values would less affect the net income than they did in the yesteryear.
Incheon Airport ‘s of import regulation
Every people who experience Incheon international Airport argue without vacillation that Incheon international airdrome is the best airdrome in the universe. Even though it is a public company, Incheon international airdrome ever actively listens to the demands of clients to better efficiency. Therefore it ever looks like trade name new airdromes for 9 old ages and go one of the most competitory airdromes in the universe. This is because of the geographic advantage, superior service and the operating ability of Incheon international airdrome corporation is executing.
One of the advantages Incheon international airdrome is the convenience of the transportation. For illustration, if person has to take a flight from United States, halt at Shanghai to reassign, and arrive at Qingdao, he should reassign from international flight to domestic flight. In this state of affairs he will experience incommodiousness to happen his luggage from international flight and direct it to domestic flight. But if you fly into Incheon international airdrome to reassign to travel to the Qingdao, the International flight will be flown twice and he does non hold to happen or direct at the airdrome which is non his finish. Incheon International Airport, calls the system ‘Through-check system ‘ . Peoples do non necessitate to happen their baggage or travel through such complicated processs such as get oning base on balls.
Besides Incheon airdrome possess many paths to travel to many metropoliss. Compared to Japan ‘s Narita Airport and Pudong Airport in China, which are available for 35 and 31 line each in the Asiatic International air hose, Incheon international airdrome has more lines which can travel to 86 metropoliss. Already, Incheon airdrome is the hub air port in northeast Asia.
Government promote the touristry industry
November 2009, the authorities announced ‘ advanced schemes for touristry industry ‘ and will better the visa system to pull more Chinese tourers. Thankss to SHANGHAI EXPO which is held in May 2010, the authorities is fixing the system to come in each state with no visa. Besides the authorities is be aftering to publish the travel visa for the single visitant in Korea. Jeju Island has already allowed Chinese visitants with no visa and the Chinese tourers yearly by 2008, increased 82 per centum ( 22,913 people in 2008 ) . Even though the net income from China country out of the whole rider gross is n’t really big but the high growing potency shows the positive facet. In the ‘Advanced schemes for touristry industry ‘ , authorities besides announced it will advance and better the system related with holiday and vacations. To guarantee the legal vacation and to do certain people enjoy their holidaies plenty. These sorts of authorities actions will decidedly assist the air hose concern, and of class it will assist Korean Air to do more net income.
Actually Korean Air has been exerting a green direction during the past 10 old ages. As we know planetary heating is impacting the full universe and has cause a cultural daze to about the full population doing large companies create Eco friendly runs in order to fulfill the consumers at winging Korean Air that they are non fouling the environment. They are really cut downing nursery gases, cut downing fuel ingestion, utilizing energy expeditiously, and even fixing the noise decrease.
Particular service for increasing theodolite riders
As we mention before, Incheon airdrome is one of the biggest and successful airdrome in the universe pulling the attending of many riders. Its service is besides really convenient because they can give hotel installations a Korean Spa if riders have to wait less than a twenty-four hours. Besides because of the Through-check system, the demand to pass through Incheon airdrome increased. But how can we increase the demand of Korean Air when they transit to Incheon airdrome?
In our sentiment and after doing few researches, we conclude that a recommendation to increase Korean Air demand would be to give particular penchant to riders utilizing Korean Air at Incheon airdrome. In order to make this we need some aid from the Korean authorities to give Korean Air the installations to set up this privilege penchant because Incheon airdrome is a public company. There is a high outlook that the authorities can assist because if there is more income as a Korean Air there will be more income to the state ( revenue enhancement ) . Some particular penchant we discuss can be particular price reductions to Korean Air riders in their stay at nearby hotels of Incheon airdromes. Another recommendation is to hold a room for Korean Air riders inside the airdrome when they can hold a free java, remainder comfortably and do them experience particular because they are winging Korean Air. In this manner if riders transit to Incheon airdrome they will ever prefer Korean Air, increasing the demand of the air hose and holding extra net incomes.
Actually Korean Air has been exerting a green direction during the past 10 old ages. As we know planetary heating is impacting the full universe and has cause a cultural daze to about the full population doing large companies create Eco friendly runs in order to fulfill the consumers at winging Korean Air that they are non fouling the environment. They are really cut downing nursery gases, cut downing fuel ingestion, utilizing energy expeditiously, and even fixing the noise decrease. We besides have to advert that Korean Air besides contributes to the societal parts activities. Many riders do n’t cognize about these information that Korean Air is making, even we as a research workers did n’t cognize that Korean Air had a batch of part to the environment. We made up that the one manner to inform the riders that Korean Air is caring about the environment, is to do promotion at the magazines when riders get aboard to Korean Air air services. Besides when turning the Television inside the aeroplane there will be a short ad of Korean Air informing that they are being a Eco-friendly company and besides adding some particular characteristics. This manner rider can take scruples on the societal and environmental activities that Korean Air is executing. As air hoses are normally planetary companies, one of the chief aims and competency is besides concern about the planetary environment. Finally this selling will assist Korean Air non merely to pull clients but besides to acquire a positive place in planetary air hose market.
KAL is one of the promising international companies all over the universe. KAL is already known to the universe ‘s best air hose in cargo transit country. KAL has many chances to be influenced positively. Of class, pull offing an international company is a ambitious undertaking but KAL is making good. We ‘ve merely recommended to beef up specialised high quality service for increasing theodolite riders and its ‘ eco-friendly direction activities. It is clip to travel abroad with more customized and localised international selling scheme. We expect that KAL will be one of the best air hoses in the whole universe.
1. Employee ‘s Organization Chart
Beginning: Koran Air Website
2. Company Organization Chart
Beginning: Korean Air Website
3. , Full members of Skyteam
Full members and their member & A ; non-member affiliates
Member air hose
Aeromexico Connect, Aeromexico Travel
Brit Air, City Jet, Regional
Air One, Air One CityLiner
China Southern Airlines
Chongqing Airlines, Xiamen Airlines
Delta Connection, Delta Shuttle
Martinair, transavia.com, transavia.com Denmark
Beginning: Skyteam Website
4. The increasing rate of theodolite riders use KAL
( Compared to the former twelvemonth )
Beginning: Incheon International Airport Website
5. The per centum of theodolite riders out of the whole riders use KAL
Beginning: Incheon International Airport Website