Korean Air SWOT and PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Expand and grab larger market share through acquisitions: Korean Air can further expand its operations and bases by conducting mergers and acquisitions. In 2021, Korean Air completed its acquisition of Asiana Airline along with Hanji Group. The company created 20 working groups consisting of 100 experts from different fields at the company, and together with law and accounting firms, reviewed documents and conducted staff interviews at Asiana Airlines and its 10 affiliates for about three months from the beginning of December 2020. Korean Air created the post-merger integration (PMI) plan after thoroughly conducting due diligence with the support and cooperation of the Korea Development Bank and Asiana Airlines and submitted it to the Korea Development bank in March 2021. The PMI plan was submitted to the Korea Development Bank on March 17, and it is currently being modified and updated. This merger will allow Korean Air to establish an effective global passenger network around Incheon airport while supporting the airport’s growth and development as Northeast Asia’s hub airport. Cargo operations will also benefit from efficient integration of aircrafts, strengthening the connection network through Incheon airport, promoting it as a logistics hub in Asia. Through this acquisition, Korean Air will also be able to increase profitability by streamlining redundant routes, strengthening connectivity and maximize the benefits of this joint venture. The merger will also increase the economies of scale in terms of costs, consolidation of facilities, sales organization, aircrafts and terminals. Through more such mergers, Korean Air can take up a larger market share in the future.

2. Improve infrastructure and equipment while adopting new and advanced technologies: The Korean airline maintains aviation Safety Management Systems (SMS) for a safer working environment. As the technology has progressed, Korean Air along with IBM have built an air’s maintenance defect analysis system. Due to this the airline has reduced the number of flight delays and cancellations caused by maintenance issues. This has increased the customer satisfaction and operating efficiency. In 2019 the company will also run the B737 MAX 8 to enhance its competitiveness to meet the increasing consumer demand. The company has also ordered 30 new Boeing 787 planes which will help in satisfying the increasing consumer flow. Korean Airlines has also joined hands with IBS Software's iCargo to improve its cargo management. The web solution is now live at 130 locations allowing Korean Airlines to have complete control over the movement of its cargo.

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Threat

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Political

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Economic

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Social

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Technological

1. Increased IoT transformation in the aviation industry: Air safety is essential part of the aviation industry. The Korean Aviation industry unfortunately has a very poor history of air safety, with Korean Airlines being one of the worst in the industry. South Korea therefore came up with a very startling yet effective way of improving air safety records – they simply decided to ban airlines from any route on which they have an accident. However, this is not a very practical way of dealing with the problem. Newer technologies have enabled the aviation industry to come up more scientific and dependable solutions. The global aviation industry has started incorporating AI to improve air safety standards. As a result, 2019 became the third safest year in the history of commercial flights. Along with this, the aviation industry is also increasingly looking into more stringent aircraft maintenance procedures to avoid flight delays and cancellations and even air accidents. Korean airline maintains aviation Safety Management Systems (SMS) for a safer working environment. As the technology has progressed the Korean air along with IBM have built an air’s maintenance defect analysis system. This has a positive impact on reduction of flight delays and cancellations due to maintenance problems, reduction in flight delay and cancellation will help in increasing customer satisfaction and operational efficiency.

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Legal

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Environmental