Cho Won Tae: "New Government's Top Priority Is Resolving Tariff Issues... Hopes for Predictable Business Environment"

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Cho Won Tae, Chairman of Hanjin Group and CEO of Korean Air, expressed his hopes that the new government would resolve tariff issues and foster growth in the aviation market.

Chairman Cho Won Tae of Hanjin Group. Photo by Korean Air

On June 2 (local time), during an interview with Bloomberg in Delhi, India, where he was attending the 81st Annual General Meeting of the International Air Transport Association (IATA), Chairman Cho stated, "The new government's top priority will be to resolve tariff issues, and I hope that a predictable business environment will be established."

He added, "Over the past five to six months, the absence of leadership combined with global economic challenges has led to confusion," and emphasized, "Since Korea has an export-oriented economic structure, concluding trade agreements will help increase predictability."

Korean Air purchases aircraft from Boeing (United States) and Airbus (Europe), while also supplying aircraft parts to these companies. Chairman Cho noted, "Historically, the aviation industry has not been subject to tariffs, and aircraft purchase prices have been finalized through pre-arranged contracts." However, he expressed concern that "the prices of spare parts and other items are expected to rise in the future."

Regarding the impact of the trade war on aviation demand, he acknowledged the possibility of increased volatility. He said, "Due to the aftermath of the US-China trade conflict, demand for cargo shipments from China to the US has declined sharply, but passenger demand, especially in the premium segment, has remained relatively stable." However, he pointed out, "Depending on the outcome of trade negotiations, volatility could increase, and this is having a significant impact on the overall Korean economy."

He continued, "Since Korea is an exporting country, the government would prefer a weaker won, but from an airline management perspective, a stronger won is preferable." He added, "It would be beneficial if the Russia-Ukraine war is resolved and US-led sanctions on Russia are lifted, allowing us to fly through Russian airspace."

Chairman Cho also discussed plans for introducing new aircraft and expanding routes, stating, "We will introduce new aircraft both to expand our network and to replace aging fleet, thereby improving operational efficiency." He added, "We are exploring entry into various new routes with potential outside the United States, but we will not reduce supply on North American routes."

Meanwhile, at this annual general meeting, Chairman Cho began his third term as a member of the IATA Executive Committee, the highest policy-making and decision-making body of IATA, often referred to as the 'United Nations General Assembly of the aviation industry.' He was first appointed to a three-year term on the Executive Committee in 2019 and was reappointed in 2022. This marks his second consecutive reappointment.

The IATA Executive Committee is composed of CEOs from airlines around the world who are selected based on their expertise and experience. The committee sets the direction for IATA's activities, oversees its affiliated organizations, and reviews and approves matters such as the appointment of the Secretary General, the annual budget, and member qualifications.