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Strategic National and Airport-level Approaches

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Strategic National and Airport-level Approaches06



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Title Strategic National and Airport-level Approaches
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Material Type Reports
Date 2015
Language Korean
File Type Theme
Subject Industry and Technology
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Abstract

Sub-Theme 1 l Strategic National and Airport-level Approaches ##MORE_LAYER_BOX##In the video section, you can watch the interview videos about Incheon International Airport. The Interviewee is a Kang, Dong Seok and Lee, Jae Hee. Kang, Dong Seok is the first president of Incheon International Airport Corporation and the Minister from the Ministry of Land, Infrastructure and Transport in Republic of Korea. Lee, Jae Hee is the 3th president of Incheon International Airport Corporation##MORE_LAYER_BOX_END##



Hub Airport Strategy

Based on the geographic location of Korea, a peninsula surrounded by the three great powers of China, Japan and Russia, Korea’s ‘Gateway Airport’ or ‘Hub Airport’ strategy was seen as essential for the country’s sustainability. Korea has continued to develop IIA as a ‘Hub Airport’ for Northeast Asia. IIA’s role as a hub linking the spokes of international trade and travel for Northeast Asia was not only for economic benefits, but also part of a national strategy to turn the entire country into a hub for Northeast Asia.

 

[Figure 4. Location of Korea Surrounded by China, Japan, and Russia]



 

‘Open Sky’ Policy and ‘Globalization’

The hub strategy at the country level naturally led to air transport ‘Open Sky’ and ‘Globalization’ policies. Such policies have helped broaden markets and strengthen the competitive power of the national airlines and airports.

 

 
[Figure. 5 Importance of Air Transport and Airports in Korea Shown by Air Proportion]


 

Principles of Competition and Privatization

Another important air transport and airport policy is the ‘Principles of Competition and Privatization.’ They have permitted competition between airlines by licensing small carriers (LCCs) to operate domestic and international routes and encouraged competition between airports by establishing two different airport corporations: Incheon International Airport Corporation(IIAC) and Korea Airport Corporation (KAC). Both have been designated market-based public corporations in order to enhance efficiency and profitability through autonomous management. ##3D_LAYER##All eight airlines based in Korea are private companies without government stakes.[4]##3D_TEXT:Privatization types depend on ownership and operation. All of the airlines in Korea are owned and operated by Korean nationals. The government owns 100% of the two airport corporations, which are operated independently subject to government auditing.##3D_LAYER_END## Korean Air (KAL) served the market as a private monopoly until 1969. Since then, the government has never changed its air transport privatization policy. Inherently, this led to the airport policy permitting airport corporations to pursue profits like private companies.



Policy of Harmony

The ‘Policy of Harmony’ assigns two airports to the same region. The Seoul Gimpo International Airport and Incheon International Airport have served Metropolitan Seoul since IIA opened in 2001. The Korean Government originally designated IIA for International operations and GIA for domestic routes, but as GIA has better access to central Seoul, the government allowed airlines to operate a few international flights from GIA to Tokyo, Osaka, Beijing, Shanghai, and Taipei, which are major cities in neighboring countries located within a 2,000-km radius from Seoul. Making connections between GIA and IIA is relatively easy thanks to good road and rail ground transportation links.

The ‘Policy of Harmony’ is shown in long-term air transport and airport policies too. Air transport and airport policies have been legislated as part of “Long and Medium Term Five-year Plans.” Itemized air transport and airport policies are governed year-by-year by these plans to avoid conflicting policies.



Policy of Performance Evaluation and Feasibility Tests

The Korean government’s ‘Policy of Performance Evaluation’ for public entities has helped to enhance IIAC’s operating efficiency and profitability. Performance evaluation results are directly linked to incentivized airport employee salary scales.

Two ministries, the Ministry of Land, Infrastructure, and Transport (MOLIT) and Ministry of Strategy and Finance (MOSF), govern investment in the airport development. All airport development plans must pass MOLIT screening processes and feasibility tests, and investment projects exceeding US$50 million must pass multiple MOLIT and MOSF feasibility tests.