Korean Air Cargo: Strategic Challenges in an Evolving Environment

Abstract

This case study conducted qualitative research of the air cargo transportation industry, focusing on the case of Korean Air Cargo. The air cargo business was now in its maturity stage and had revenues of $66 billion in 2010. Since the deregulation of the air industry during the expansion stage, the industry had witnessed fierce competition. Radical changes in the business environment and international politics also affected the industry and cargo airlines need to adjust to industry lifecycles and industry circumstances. In 2004, Korean Air Cargo was ranked the world's largest air cargo carrier. This was the result of adaptation to the business environment and meeting the needs of the market. The firm offered a new service, focusing on delivery of IT products and targeted niche markets. However, the double-digit growth rate of the Chinese economy offered huge opportunity for Chinese and Hong Kong airlines, and by 2010, Cathay Pacific surpassed Korean Air Cargo to become the market leader. With the double-dip global recession and the slowdown in the Chinese economy as well as lowered barriers to entry due to international deregulation, the air cargo industry has entered a hyper-competition phase. What should Korean Air Cargo do to proactively address world economic trends and the industry environment in order to capture market leadership again?