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JUNE 19, 2000

Korean Air


The Korean Air company was established by the South Korean government to be the country's national airline. It was state-owned until 1969 when it was sold by the government at the time to the vast Hanjin shipping and transport empire. It was not a great business because all Korean citizens were restricted from travelling abroad until the laws were liberalized in 1989. This led to a boom in sales for the company and it began to invest in becoming one of the leading airlines in the Asia-Pacific region. In only a few years Korean Air became the tenth largest passenger carrier in the world with a modern fleet of planes and a competitive level of pricing. Expansion was rapid and dramatic and included the opening of direct links into China in 1994. As part of the global expansion plan, Korean Air decided to get into Grand Prix racing and joined forces with Simtek Grand Prix in the course of that year. Unfortunately Simtek never had enough money and the team reeled after the death of its driver Roland Ratzenberger at Imola in 1994. Korean Air stayed on the Simtek until the team ran out of money in the middle of 1995 after which the sponsorship was transferred to the Tyrrell team which had space available at a sensible level of pricing. Korean Air remained a Tyrrell sponsor until the end of the 1996 season when it was decided to get more coverage by allying with a more successful team. A new sponsorship deal was agreed with Benetton and since 1997 Korean Air has been one of that team's partners. Unfortunately the Korean economy has slumped badly and a series of unfortunate air crashes have damaged the company's reputation. Consolidation in the airline industry is also putting pressure on carriers to strengthen their situations or face takeover. The company has an aerospace subsidiary which produces US-licensed helicopters and jets for the Korean military although the economic crisis of 1998 has taken a toll on that business as well, although Korea is now beginning to recover and recent talks between the governments of North and South Korea could result in considerably more long-term business for the company.