Air Transport World

Asiana's competitive code; betting that quality of service and equipment will win the battle, the emerging Korean competitor wants the government to give it more international opportunities.

Betting that quality of service and equipment will will the battle, the emerging Korean competitor wants the government to give it more international opportunities

In the sea of Korean Air-blue airplanes at Seoul's Kimpo Airport glides the occasional shark, a gray-livered Asiana airplane nosing around for a piece of the incumbent's market. This is a very well-heeled shark, indeed, outfitted with the best of everything and geared up for a real feeding frenzy. And while growth has been consistently at rates considered well beyond healthly in other parts of the world, Asiana feels stifled bu government policies that restrict it acces to the high-yield international routes it needs to truly prosper.

Asiana has free access to the deregulated domestic market but has few expectations of making serious money, while Korean Air vastly outguns its domestic capacity and undercuts its already low fares by 5%. In fact, that 5% seems to be an across-the-board KAL policy to differentiate itself from Asiana. Korean, with a net profit of $137 million last year, seems to be tolerating the fare cut well.

Asiana executives shrug off the fare differential as justified, claiming the 5% to be their adopted policy consistent with Asiana's passenger-service philosophy. "We have a higher quality of service," said an Asiana officer. That is the Asiana market differentiation.

President and CEO Sam Koo Park wishes KAL wasn't quite so rigorous in its domestic fare offensive. He says just a 10% fare hike would give Asiana a $30 million net increase. Although the Korean government instigated its creation, Asiana believes Korean Air still is favored in the award of new international routes and retaining government protection of existing routes until the annual passengers exceed around 200,000.

Asiana has mounted a campaign to persuade the government to give it better access to routes. …

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