Cargo win from Euro, S Korean trade deal

A FREE-trade agreement (FTA) between Europe and South Korea could allow Korean Air Lines to take Cathay Pacific’s crown as the world’s largest air cargo operator. Cathay knocked Korean from its rank last year.

The agreement, due to start on 1 July, is predicted to be worth $4.7 billion a year to Europe for the next 15 years as electronic goods will flow west and food, wine and fashion east. South Korea’s airfreight exports is expected to increase 6.4 per cent and imports 2.8 per cent.

“Airlines will most definitely benefit from the trade agreement,” said Song Jae Hak, a transport analyst at Woori Investment & Securities in Seoul (South Korea). “Korean Air is sure to reclaim its number one position.”

At least 28 per cent of Korean Air’s revenue came from European freight routes in the first quarter this year, but US routes still lead with 40 per cent.

However, the trade deal may have much stronger long-term effects on air cargo than at first glance. The US Congress is still dithering over a similar deal between the US and South Korea. Giving the European’s a head start may allow them to cement a long-term trade advantage thanks to brand awareness.