Korean Air to offer in-flight Web access
Korean Air Co. signed a letter of intent with a
unit of Boeing Corp. yesterday for the installation of in-flight
Internet connections on its aircraft beginning next year
Korean Air Co. signed a letter of intent with a
unit of Boeing Corp. yesterday for the installation of in-flight
Internet connections on its aircraft beginning next year.
The agreement worth 25 billion won ($21 million)
is aimed at providing the service on all of Korean Air's flights
to North America, Europe, Australia and New Zealand by 2008.
New aircraft such as the B777-200 and B747-400
will be the first equipped by Connexion by Boeing, the U.S.
aircraft manufacturer's mobile services arm. Korean Air plans to
install the Internet access system on 33 aircraft.
The plan is seen as an effort to differentiate
the airline from low-cost airlines sprouting up in Asia. "The
cheap carriers are already strengthening their presence in
Southeast Asia. To vie with these low-budget carriers, local
airlines should convince customers of their quality services.
The Internet offer is definitely a part of such amenities,"
Chang Keun-ho, aviation analyst at Kyobo Securities, said.
"Given that the nation's two airlines offer
similar fares, the best way to beat the competition is to
provide better services to passengers. I think that Asiana will
launch a similar Internet service soon," he added.
Korean Air plans to charge less than $30 for
eight hours of in-flight Internet access. Powered by seven
satellites and ground network facilities, the system can serve
more than 100 passengers on an aircraft simultaneously.
"We will adopt a flexible price policy for the
service and introduce various pay packages such as whole-flight
and half-journey packages. Even the passengers who would like to
use Internet for only an hour can also enjoy the service," Lee
Hyoung-woo, public relations officer, said.
Asiana Airlines, Korean Air's smaller rival, said
it is considering buying the same Internet access system from
Boeing. But the company said a purchase plan has yet to be
confirmed pending further negotiations with the U.S. company.
Asiana officials conducted a test of the system at Seoul's Kimpo
Airport yesterday.
A number of major foreign airlines, such as
Lufthansa and Japan Airlines, have already installed the
Internet service provided by the Boeing subsidiary.
Korean Air was launched in 1969 after local
conglomerate Hanjin acquired the nation's sole state-run
airline. Latecomer Asiana was established by another
conglomerate, Kumho Group, in 1988.
Korean Air's revenue last year was 6.17 trillion
won, compared with Asiana's 680.7 billion won.
Many analysts are taking a wait-and-see approach
to the airline industry this year. Travel demand has recovered
but high oil prices may hold back further growth, they note.
"Oil prices remain high so far. The fuel costs
are presently 40 percent higher than the same month last year.
This could be the biggest worry for local airlines," Kyobo's Cho
said.
Fuel accounts for almost one-fifth of Korean
Air's overall operating costs. A rise of $1 to the unit cost of
fuel translates to a 30 billion won increase in the company's
annual expenses, industry watchers note.
But Cho said that current foreign exchange rates
would benefit airlines. "The strong won against the U.S. dollar
has cut the amount of carriers' foreign debt in local currency
terms. The profits generated here are obviously significant," he
said.
