Bilateral deal allows 15 weekly freighter services to mainland
Beijing and Seoul have signed bilateral agreements allowing South Korean airlines to operate 15 weekly freighter services to five destinations on the mainland - the first agreement of its kind for any foreign airline.
Under the agreement, Korean airlines will operate four weekly air freighter services to Beijing, four to Shanghai, two each to Tianjin and Nanjing and three to Shenzhen from Seoul.
Korean Air vice-president Lee Ji-young, who is general manager of the airline's cargo marketing team, said: 'The China Government's requirement is that the services should be on a commercial agreement basis.' He said if Korean airlines operated the services without reciprocal services, compensation might have to be paid.
Air China is reluctant to fly to Seoul although the mainland also has reciprocal rights to five destinations in Korea. The Chinese carrier is expected to start services at a much later stage.
The freighter services will be shared between South Korea's two carriers serving mainland destinations, Korean Air and Asiana Airlines.
The Shanghai route is likely to be hotly contested between the two. Asiana already operates a passenger service to the city and is expected to lobby strongly for the lucrative freighter service.
Korean Air now flies charter freighter services to Shenzhen twice a week.
Mr Lee said he did not know how the Korean Government would split the services between the two carriers.
'Because of the Korean Government policy on traffic rights allocation and commercial agreements with Chinese airlines that need to be modified under the new bilateral agreement, freighter services to such destinations will be feasible in the latter half of 1998 at the earliest,' he said.
Separately, Mr Lee said Korean Air, like other airlines in Thailand and Singapore, was considering whether to increase its rates or to impose a temporary currency adjustment tariff to tide it over the South Korean currency crisis.
Whichever decision was taken, it would apply to all routes out of Korea, he said.
Korean Air's trans-Pacific service has been greatly affected by the won's plunge in value against the US dollar.
The abrupt depreciation of the won and Southeast Asian currencies would have a negative impact on air cargo as the countries concerned would import less, Mr Lee said.
Y. O. Kim, president of Taehwa Aerosea Forwarders, said a few small and medium-sized Korean freight forwarders, who specialised in air freight imports, might go bankrupt as a result.
Mr Kim said as freight forwarders had to pay cash for imported goods when accepting cargo at the airport, they would be paying a higher rate for the US dollar.
Freight forwarders risked losing 10-20 per cent of the money paid for releasing cargo as their clients enjoyed two to three months credit.