Asiana Airlines Sells Cargo Business to Air Incheon: A Strategic Shift in South Korean Aviation
By Safe Fly Aviation News Team | April 17, 2025
In a landmark move for South Korea’s aviation industry, Asiana Airlines (OZ, Seoul Incheon) has finalised the sale of its cargo business to Air Incheon (KJ, Seoul Incheon) for KRW 470 billion (approximately USD 328 million). The transaction, approved by South Korea’s Ministry of Land, Infrastructure and Transport on April 15, 2025, marks a pivotal step in the ongoing merger between Asiana Airlines and Korean Air. This article explores the details of the deal, its implications for the aviation sector, and what it means for Air Incheon’s future as a major cargo operator.
Background: Why the Sale?
The sale of Asiana’s cargo division was a key condition mandated by the European Commission to address antitrust concerns surrounding Korean Air’s USD 1.3 billion acquisition of Asiana Airlines, completed in December 2024. The European regulators expressed concerns about the competitive impact of the merged entity on freight routes between South Korea and Europe, fearing reduced competition and higher prices. To secure approval, Korean Air agreed to divest Asiana’s cargo business and cede four European passenger routes (Paris, Rome, Frankfurt, and Barcelona) to rival T’way Air.
Asiana’s cargo division, established in 1994, has been a cornerstone of South Korea’s trade and logistics sector. Starting with its first freighter service on the Seoul-Los Angeles route, the division grew to handle 725,000 tons of international cargo in 2023, making it a significant player in global logistics. During the COVID-19 pandemic, Asiana repurposed passenger aircraft to transport medical supplies and vaccines, reinforcing its critical role in supply chain continuity.
Details of the Transaction
The agreement, signed in August 2024 and finalised with shareholder approval on February 27, 2025, transfers Asiana’s entire cargo business to Air Incheon. The deal includes:
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Freighter Aircraft: A fleet of 11 cargo aircraft, including eight Boeing 747-400Fs, one Boeing 767-300F, and two Airbus A350Fs. This significantly expands Air Incheon’s current fleet of four Boeing 737-800Fs.
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Slots and Traffic Rights: Access to Asiana’s cargo slots and international traffic rights, enabling Air Incheon to operate on established routes to the US, Europe, and Asia.
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Workforce: Over 800 employees, including pilots, maintenance staff, and cargo sales personnel, will transition to Air Incheon, ensuring operational continuity.
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Customer Contracts: Existing cargo contracts with Asiana’s clients, providing Air Incheon with a ready customer base.
Air Incheon, established in 2012 as South Korea’s only airline dedicated to freighter cargo transport, paid KRW 470 billion for the acquisition. The deal is expected to be fully integrated by July 1, 2025, with Air Incheon launching a “converged entity” under its brand. To support the expanded operations, Air Incheon has relocated to a new office in the One Grove Building in Magok-dong, Gangseo-gu, Seoul.
Air Incheon’s Rise to Prominence
The acquisition positions Air Incheon as South Korea’s second-largest cargo operator, behind only Korean Air, which handled 1.46 million tons of cargo in 2023. With the combined cargo transport performance of Air Incheon (39,000 tons) and Asiana (725,000 tons), the airline will manage over 760,000 tons annually, significantly boosting its market share.
Air Incheon is already planning to expand its network, with a focus on launching scheduled and on-demand cargo services to the United States. In January 2025, the airline applied to the US Department of Transportation for approval to operate these routes, signalling its ambition to become a global player. The acquisition also opens opportunities for Air Incheon to serve European markets, leveraging Asiana’s established freight routes.
To oversee the integration, Air Incheon appointed Kim Kwan-sik as CEO in December 2024. Kim, a financial expert with experience at Kumho Asiana Group affiliates, was recommended by Socius Private Equity, Air Incheon’s largest shareholder. His appointment reflects the airline’s focus on ensuring a smooth and timely acquisition process, especially as demand for air cargo remains strong due to booming e-commerce transactions.
Fleet Integration and Modernisation
The transfer of Asiana’s 11 freighter aircraft significantly enhances Air Incheon’s operational capacity. Asiana’s cargo fleet, valued for its versatility, includes:
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Boeing 747-400F: Eight aircraft, known for their large cargo capacity, are ideal for long-haul routes like Seoul to Los Angeles.
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Boeing 767-300F: One aircraft, offering efficiency for medium-haul routes.
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Airbus A350F: Two modern freighters, designed for fuel efficiency and reduced emissions, align with global sustainability trends.
In contrast, Air Incheon’s existing fleet of four Boeing 737-800Fs is better suited for shorter regional routes. The addition of Asiana’s larger aircraft allows Air Incheon to diversify its offerings and compete on high-demand international routes. However, integrating these aircraft will require significant investment in maintenance, training, and operational alignment.
The acquisition also raises questions about fleet modernisation. Asiana’s Boeing 747-400Fs, while reliable, are ageing and less fuel-efficient than newer models like the Airbus A350F. Air Incheon may need to invest in newer aircraft to meet sustainability goals and comply with stricter environmental regulations, particularly in Europe.
Employee Transition and Challenges
The transfer of over 800 Asiana cargo employees to Air Incheon is a critical aspect of the deal. While the agreement ensures job continuity, reports indicate employee concerns about changes in work culture, compensation, and job security at Air Incheon. The airline has acknowledged these challenges and is working to address them as it prepares for the July 2025 integration.
Air Incheon’s leadership, under Kim Kwan-sik, has emphasised a commitment to maintaining a stable workforce. The airline’s expansion plans, including new routes to the US and Europe, are expected to create opportunities for career growth, potentially easing employee concerns. However, successful integration will depend on effective communication and support during the transition.
Implications for South Korean Aviation
The sale of Asiana’s cargo business has far-reaching implications for South Korea’s aviation industry:
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Strengthening Incheon Airport: The deal supports Korean Air’s goal of enhancing Incheon International Airport’s role as a global cargo hub, competing with Hong Kong and Singapore. Air Incheon’s expanded operations will drive cargo traffic through Incheon, the world’s fifth-busiest airport for cargo.
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Market Competition: By transferring Asiana’s cargo business to Air Incheon, the Korean Air-Asiana merger avoids monopolising the cargo market. Air Incheon’s rise as a strong competitor ensures continued competition, benefiting shippers and consumers.
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Global Trade: South Korea’s strategic location makes it a vital link in global supply chains. Air Incheon’s ability to handle increased cargo volumes, particularly for e-commerce and high-value goods, will strengthen the country’s role in international trade.
Korean Air-Asiana Merger Context
The sale is a critical component of Korean Air’s acquisition of a 63.88% stake in Asiana, finalised on December 12, 2024. The merger, valued at KRW 1.8 trillion (USD 1.26 billion), aims to create one of Asia’s largest airlines, with a combined fleet and network that enhances South Korea’s aviation competitiveness. Asiana will operate as a subsidiary until January 1, 2027, when it will be fully integrated under Korean Air’s new branding.
To address global regulatory concerns, Korean Air made additional concessions, including transferring European routes to T’way Air and ceding Seoul-London slots to Virgin Atlantic. The South Korean Fair Trade Commission also mandated that the merged entity maintain at least 90% of pre-merger seating capacity on 40 key routes to prevent reduced consumer choice.
Future Outlook for Air Incheon
Air Incheon’s acquisition of Asiana’s cargo business positions it for significant growth. Industry officials highlight the cargo division’s stable profitability, driven by consistent demand for air freight. The airline’s plans to launch services to the US and Europe, combined with its modernised fleet, could elevate its status in the global cargo market.
However, challenges remain. Integrating Asiana’s operations, managing employee transitions, and investing in fleet modernisation will require substantial capital. Air Incheon’s success will depend on its ability to navigate these challenges while capitalising on the opportunities presented by this transformative deal.
Conclusion
The sale of Asiana Airlines’ cargo business to Air Incheon is a defining moment for South Korean aviation, reshaping the cargo landscape and strengthening Incheon Airport’s role as a global hub. For Air Incheon, the acquisition offers a chance to become a major player in the international cargo market, with a robust fleet and expanded network. As the airline prepares for its July 2025 launch, the industry will be watching closely to see how Air Incheon leverages this opportunity to drive growth and innovation.
Stay tuned to Safe Fly Aviation for the latest updates on aviation news, fleet changes, and industry trends. Follow us for more insights into the evolving world of air cargo and global trade.
Sources: ch-aviation, PortCalls Asia, The Korea Times, Air Cargo News, Simple Flying, Reuters, The Loadstar, MK, CHOSUNBIZ
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