SUSTAINABILITY REPORT
SOCIETY
ENVIRONMENT
ECONOMY
In accordance with fair and transparent corporate management,
Korean Air herewith publishes its sustainability report describing
its environmental, economical and social activities as well as its
responsibilities towards customers, employees, shareholders,
investors, partners, communities, governmental organizations,
and citizens' groups. This report is available on the web site of
Korean Air in the form of an e-Book and can be downloaded.
(http://www.koreanair.com)
The Purpose of the Report | This report aims to aid stakeholders
in decision making by making known our public activities such as
results in economic, environmental and social areas to various
stakeholders including customers, employees, and business
partners. We aim to do so in a balanced and transparent manner.
Basic Information | This report is the second sustainability report of
Korean Air containing Korean Air's social activities, and environmental
responsibilities and performances. We have strived to improve our
report based on experiences accumulated over the years.
Reporting Principles | We have followed the 2002 Sustainability
Reporting Guidelines of Global Reporting Initiative for the
production of this report. In particular, we have produced this
report, befitting the business environment of airlines, by applying
the global aviation environmental policies of the International
Civil Aviation Organization, the Green House Gas Protocol, and
standards of the ISO(International Standards Organization)
2007
Sustaining Excellence
%
Major Special Characteristics | The 2007 Sustainability Report
contains in the following order; ①The General Introduction to the
Company ② Social and Environmental Performances ③ Economic
Performances. This order is designed to allow stakeholders to
check economic performances after gaining useful information in
the social and environmental aspects. Along with the Annual
Report of Korean Air, this report will contribute to further
understanding the environmental and social performances, as
well as business activities, of Korean Air with ease.
Scope of Reporting | This report was produced on the basis of the
fiscal year 2006 (Jan 1 ~ Dec 31, 2006) and contains data from
observed trends over the last five years. Readers are advised to
check the 2006 Annual Report for more detail on economic
performances.
The "%" symbol is an expression of Korean
Air's aim to pursue more concrete and practical performances in its sustainable management activities.
Company Profile
CEO Message
04
Company Profile
06
2006 Sustainable Management Activities
10
Sustainable Management
12
Corporate Governance and Crisis Management
14
Flight Safety Policies
15
Ethical Management, Transparent Management
17
Industrial Safety
19
Social Value & Responsibilities
Obligations & Responsibilities towards Customers
22
Obligations & Responsibilities towards Employees
24
Health
28
Coexistence Management
29
Social Contributions
30
Environmental Value & Responsibilities
Sustainable Environment
36
Environmental Impact
38
Environmental Management System
39
Climate Change
41
Fuel Management
43
Airplane Modernization
45
Noise Control
46
Local Air Quality
49
Other Environmental Activities
51
Economic Value & Responsibility
Economic Responsibilities to Stakeholders
58
2006 Business Results
60
Organization Chart
62
Board of Directors
63
Directory
64
Sustainable Future
Overseas Network
66
Domestic-China/Japan Network
68
Air Fleet Data
69
GRI Index
70
Glossary
74
About this Report
76
FEEDBACK
77
※ You can use this contents list as a guide page as well as a bookmark
while reading this report.
Sustaining Excellence
After departure from a runway, after spreading its silver wings, Korean Air embraces
the expansive sky of our world. We are working towards a society connected by flight, a
global environment where all are healthy and happy in a prosperous and abundant
world. Korean Air strives to realize a sustainable future for humanity through social,
environmental and economical development. Korean Air flies toward a brighter future
with new hopes for all.
Detention Pond
EXCELLENCE IN OPERATIONS
Incheon
International Airport
Hyatt Regency Incheon
Cargo Terminal
Ground Support
Catering Center
Resources Management 55p
Cargo Loading Dock
Aircraft Modernization 45p
Aviation Fuel Storage Facility
Soil Management 54p
Ground Support
Local Noise 48p
Local Air Quality 49p
Wastewater Treatment
De-Icing & Anti-Icing 53p
Waste 51p
Hangar
Chemical Materials Control
52p
Wastewater Control 53p
Aircraft Cleaning 54p
Climate Change 41p
Fuel Management 43p
Noise Control 46p
2007 SUSTAINABILITY REPORT
CEO MESSAGE
CEO MESSAGE
4
CEO MESSAGE
2007 SUSTAINABILITY REPORT
5
Korea's Leading Carrier,
Aiming at Global Leadership
Dear Readers,
I would like to express the deepest gratitude to our customers, shareholders and other stakeholders for their continued encouragement and support. As we publish our second sustainability report, we are proud to present to you an excellent performance by Korean Air in the environmental,
social and economic aspects during the past year.
The year 2006 was fraught with adverse business conditions. Oil prices and interest rates were steadily on the rise, while the domestic economy
remained flat. Despite these unfavorable business circumstances, Korean Air actively sought new sources of income, created new market demands, raised profit units and improved our service quality. As a result, we achieved a strong performance with KRW8,080 billion of operating
revenues, KRW500 billion of operating income and KRW340 billion of net income.
While continuing to make strong growth, we have never forgotten our responsibilities towards our stakeholders and have continued our efforts
for co-development. Furthermore, we aim to solidify our partnerships with our shareholders, business partners, customers, employees as well
as with our communities. To this end, we reorganized our corporate vision and management strategies to focus on our customers and initiated
various activities to meet the diverse demands of stakeholders. At the same time, we continue to invest in various programs to help our employees reach their full potential. Through various social activities, we are acting as a caring and responsible corporate entity.
In order to establish transparent and open-minded management in the Company, we have put in practice programs of ethical management. Fully
aware of the importance of ethical business conduct, we strive to enhance transparency and reliability through diverse campaigns.
In addition, as part of our responsibility towards the environment, we have put in place environmental management. In pursuit of sustainable
growth, we developed the environmental vision of "Improving the Value of Life through the Harmonization of Aviation and the Environment."
Based on this vision, Korean Air will continue activities that respect the present and future value of the environment.
At the moment, the global regulations dealing with global warming, climate change, and the depletion of resources calls for a complete change in
the air transportation business. This change will bring, along with challenges to Korean Air, opportunities to create new value. Through proactive
technological development and new business procedures that create harmony between environmental, social and economic values, Korean Air
will create a new paradigm of sustainability.
The 2007 sustainability report focuses on showing the changes underway in Korean Air at the moment to our stakeholders. I trust this report will
facilitate communications between Korean Air and its stakeholders. Join us in our effort to build a sustainable future for all of us.
Thank you.
May 31, 2007
Cho, Yang Ho / Chairman & CEO
Company Profile
2007 SUSTAINABILITY REPORT
COMPANY PROFILE
6
Leaping forward to become a Leading
Global Carrier
Korean Air operates 121 aircraft and offers scheduled routes to 95 cities in 35 countries
throughout the world. Attaining 1st and 15th positions in the cargo and passenger sector respectively, Korean Air leads domestic airline business, and has emerged as a leading global
carrier. In addition to cargo and passenger transport, Korean Air also has diverse business interests such as in-flight catering, domestic and international hotels, and aircraft manufacturing. With the vision to becoming a "Global Leading Carrier" and the mission of "Excellence in
Flight, "Korean Air has established its objective of becoming a "World Top 10 Airline by 2010"
with revenues of KRW10 trillion and ordinary income of KRW 1 trillion. The core strategy for
achieving this objective has been the establishment of an optimal operating system by Korean
Air. This system will seek to enhance the brand value of Korean Air, further customer satisfaction and value creation, and formulate change in an innovative corporate culture.
● Company Profile
Vision & Mission
June 19, 1962
Capital
KRW363.3 billion
Main Office
1370, Gonghang-dong, Gangseo-gu, Seoul, Korea 157-712
Total Assets
KRW13,584.7 billion
Total sales
KRW8,077.8 billion
Employees
14,755 persons
Aircraft Owned
121 units
Accumulated Passengers Transported
22,353,000 persons
Cargos Transported
2,117,000 tons
Shareholder Structure
Cho, Yang Ho (11.50%), Hanjin (9.24%), National Pension Fund (6.24%)
Invested Companies
Korean Airport Service Co., Ltd., Hanbul Merchant Banking, Hanjin Shipping
● Affiliated Companies
SERVICE
EXCELLENCE
OPERATIONAL
EXCELLENCE
Establishment Date
Major Business
Company Name
INNOVATIVE
EXCELLENCE
Korean Airport Service Co., Ltd.
Air Cargo, Aircraft ground handling,
Ownership
58.94
Aircraft Fueling
Hanjin Information Systems &
System Integration,
Telecommunications Co., Ltd.
Geographic information system,
MISSION
EXCELLENCE
IN FLIGHT
VISION
TO BE A RESPECTED LEADER IN THE
WORLD AIRLINE COMMUNITY
99.35
IT-outsourcing, IT-consulting
67.35
Topas Co., Ltd.
Total passenger service system
KAL Hotel Network Co., Ltd.
Hotel, Store rental
100.00
Air Total Service Co., Ltd.
Transportation
100.00
Jedong Leisure Co., Ltd.
Golf course
100.00
Global Logistics System Korea Co., Ltd.
Global logistics service
65.00
(e-Cargo, Web Service, Hosting Service)
Hanjin Tourism
Travel arrangements, Tourism Rental
HANJIN INTERNATIONAL CORP.
Hotel, Rental
HANJIN INTERNATIONAL JAPAN CO., LTD.
Real Estate, Dispatching talent
KOREAN AIR LEASE & FINANCE CO., LTD.
Leasing
55.82
100.00
55.00
100.00
● New Routes Opened in 2006
Aircraft Introduction
B737
Two (Apr., Dec.)
Craft
Frequency
Initial Flight
Seoul/Komatsu
B737
Four/week
06.3.27
Jeju/ Fukuoka
A300
Twice/week
06.3.31
Seoul/Istanbul
A330
Three/week
06.5.21
Seoul/Hakodate
B737
Three/week
06.6.01
Busan/Sapporo
B737
Three/week
06.6.01
Seoul/Kota Kinabalu
B744
Four/week
06.7.24
Seoul/Yantai
B737
Daily
06.8.25
Seoul/Weihai
B737
Daily
06.8.25
Seoul/Las Vegas
B777
Three/week
06.9.22
Seoul/Guangzhou
B737
Four/week
06.9.26
Seoul/Dalian
A300
Daily
06.10.01
Seoul/Shenzhen
B737
Three/week
06.10.01
Seoul/Yanji
B737
Three/week
06.10.01
Seoul/Changsha
B737
Five/week
06.10.29
Seoul/Pattaya
A300
Three/week
06.10.31
Seoul/Kat ManDu
B777
Once/week
06.11.13
Seoul/Phnom Penh
B737
Four/week
06.11.14
Seoul/Siem Reap
B737
Four/week
06.11.15
Remark
COMPANY PROFILE
2007 SUSTAINABILITY REPORT
In 2006, Korean Air advanced into major
global cities, with high growth potentials,
by opening scheduled flights to Las
Vegas, U.S.A., Istanbul, Turkey, Phnom
Penh, Cambodia and cities in China.
Korean Air also entered into a contract to
secure a total of 25 more planes by 2015.
We believe that this will lay the foundations for mid-to long-term growth.
7
Route
Busan/Beijing
B738
Six/week
06.12.15
Seoul/Chennai
B744F
Twice/week
06.2.16
cargo
Seoul/Seattle
B744F
Three/week
06.6.01
cargo
Seoul/Miami
B744F
Twice/week
06.8.22
cargo
Seoul/Stock Holm
B744F
Twice/week
06.8.24
cargo
Seoul/Guangzhou
B747F
Twice/week
06.10.30
cargo
Seoul/Hangzhou
B747F
Twice/week
06.10.31
cargo
Seoul/Qing Dao
A300F
Four/week
06.12.5
cargo
Seoul/Tel Aviv
B744F
Once/week
06.12.17
cargo
● Aircraft Ownership Status
Three (Mar., Nov., Dec.)
B744
B772
B747
3대 (1, 6, 8월)
Two (Jan., Jun.)
B744F
0
1
2
16
3
4
5
B777
19
Aircraft De-commission/Remodeling
A330
9 1
B744
One
(Aug., remodeling to Cargo plane)
A300
A300
One
(Nov., remodeling to Cargo plane)
B737
B747F
31
Three (De-commissioned, respectively, in Mar. Jun. Jul.)
0
1
2
19
26
One (Aug.)
3
4
5
Passenger(101)
Cargo(20) Total: 121
Company Profile
Business Profile
8
Business Sectors
● Cargo Business
Korean Air operates, on a regular basis, 121
aircraft to 95 international destinations in 35
countries and 14 destinations in Korea. As
of the end of 2006, Korean Air carried 22.35
million passengers annually. Amid the difficult business conditions, with a prolonged
oil price hike and a slowdown in the domestic economy, Korean Air still managed to
achieve a strong performance due to growing demand for overseas travel, a strong
KRW, and the five day week system.
Korean Air's cargo business ranked number one for two consecutive years in the
"2005 Scheduled International FTK" announced by IATA*. In a bid to overcome the
sluggish domestic market conditions, arising from the high oil prices, strong Korean
won and sagging exports, we increased
overseas marketing while at the same time
developing new markets. As a result, an improved load factor and unit price buttressed
our revenues, despite the oversupply following the introduction of new materials.
2007 SUSTAINABILITY REPORT
COMPANY PROFILE
● Passenger Business
We provide comprehensive air traffic
service from passenger and cargo
transport to aerospace, catering, hotel
and in-flight sales.
As of the end of 2006, Korean Air operates
121 planes to carry 22.35 million passengers and 2.12 million tons of cargo annually. We are also a leader in the aerospace business in manufacturing, maintaining and remodeling aircraft.
Moreover, we enjoy a competitive edge in
the businesses of in-flight catering, hotel
and in-flight sales.
*
International Air Transport Association
** Extended Range Freighter
*** Communications Oceanography Meteorological
Satellite
**** Unmanned Aerial Vehicles
In 2006, we continued to identify new markets with high growth potentials as we
opened 20 new scheduled flights to Japan,
China and more chartered flights. We also
reorganized routes with low performances
to improve profitability. Among our efforts,
in 2006, to improve customer convenience
and productivity were the introduction of the
"On-line Advance Seat Selection" service
for international lines, a self check-in kiosk
at domestic airports, as well as an expansion of e-ticket services. We also upgraded
the seats and related systems. Specifically,
ergonomically designed KOSMO Sleeper
Seats, and audio video on demand (AVOD)
systems were installed in order to enhance
customer service. These efforts were recognized with awards as best first/business
class airline of "Time Readers' Travel
Choice Awards 2006" in October and
"Airline of the Year Asia-Pacific 2006" by
PAX International in November.
We also continued to expand new markets
by initiating cargo flights to six new cities including Chennai, India, Miami, U.S.A., and
Qingdao, China. Furthermore, to meet the
exploding market demands for China
routes, we significantly increased flights to
various cities of China as part of our effort to
preempt our competitors entrance into this
marketplace. In particular, we have started
to operate daily flights to Hong Kong and
Shanghai, have opened regular flights to
Hangzhou and Guangzhou, and have increased our number of flights to Beijing and
Tianjin. We have also entered into an agreement with China's largest courier Sinotrans
to set up a joint venture for cargo transportation in Tianjin, thereby gaining a
foothold for cargo business in China.
In terms of operations, we introduced the two
latest models of B747-400ERF**. For efficient
use of assets, we also renovated passenger
aircraft into freighters. The remodeling of
seven more aircraft is planned by 2009 and 10
more planes will be introduced until 2015, securing us as, not only a leading global cargo
carrier, but also as the world's largest.
9
● Catering Business
● Hotel & In-flight Sales Business
As a leader in Korea's aerospace industry,
Korean Air's aerospace business provides a wide
range of quality products and services, such as,
aircraft design and development, component
manufacturing and exports, aircraft maintenance
and modification, and performance upgrades.
Korean Air, operating catering factories that
utilize state-of-the-art technologies, has
acquired the approval of HACCP (Hazard
Analysis Critical Control Points) at Incheon
and Busan. Accounting for 70% share of the
domestic catering market, Korean Air supplies an average of 39,000 in-flight meals
daily both to its own flights, and to also over
30 other foreign airlines.
(Hotel)
Korean Air operates luxury hotels in Jeju
City and Seoguipo and possesses the
Wilshire Grand Hotel in LA, Waikiki Resort
Hotel in Hawaii, and the Hyatt Regency
Hotel in Incheon through its affiliates.
COMPANY PROFILE
2007 SUSTAINABILITY REPORT
● Aerospace Business
In civil aircraft manufacturing, we manufacture wing and fuselage structures for
Boeing and Airbus. We are also participating in the design and development project
of Boeing's next generation B787 aircraft. In
the maintenance and remodeling sector,
we are in charge of 10 projects for various
types of fighter aircraft and helicopters for
the Korean and U.S. military. Specifically,
we were commissioned for the follow-up
on increasing the life span of A-10 military
aircraft and successfully implemented the
B747 passenger-to-freight conversion.
In the spacecraft business sector, we are successfully undergoing several projects; the system assembly program for a launch vehicle, the
development of solar panels, and the main bus
structure and antenna for the COMS***. In addition, we successfully completed the localization of the development of a solar array system.
We are also involved in designs for the development of Korea-type helicopters lead by the
Korean government. We are also involved in the
development of close-surveillance UAV****
and high-precision GPS navigation system.
Based on accumulated skills and knowledge, the Aerospace Division will continue
R&D activities in core businesses, that can
create added values for emerging future
markets, and will strive to grow into a
leader in the global aerospace industry.
Its ambitious new healthy menu
"Bibimguksoo," spicy Korean noodles, was
awarded the gold prize at the Mercury
Awards in 2006 by the ITCA (International
Travel Catering Association) and won the
PAX Readership Awards by PAX International
magazine for the second year in a row. We
will continue to herald the excellent taste of
Korean traditional foods to the world, by developing new menus in response to sophisticating customer tastes.
(Limousine)
For more than a decade, Korean Air's
Limousine Bus Service operates the most
convenient transportation connecting domestic and international airports with
down-town locations. Adding new stops in
2006, Korean Air continues to improve our
customer services.
(In-flight Sales)
Korean Air's in-flight sales provide dutyfree items to passengers on board. We recently introduced a pre-order service,
thereby significantly improving efficiency in
in-flight sales. Through surveys, research
and strict quality control, we strive for customer satisfaction.
Company Profile
2006 SUSTAINABLE MANAGEMENT ACTIVITIES
2007 SUSTAINABILITY REPORT
2006 SUSTAINABLE MANAGEMENT ACTIVITIES
10
2006 HIGHLIGHTS
● Economic Aspect
● Environmental Aspect
● Social Aspect
(Retained Top Spot as the Largest
International Cargo Carrier for the Second
Consecutive Year)
According to the 2005 World Airline
Transport Statistics announced by IATA in
July, 2006, Korean Air recorded 7,982 million scheduled FTKs in the international airline cargo transportation sector, ranking it
1st, two years in a row. This result is significant considering that Korean Air was faced
with various difficulties such as the slowdown of growth in export cargo, due to high
oil prices, and the depreciation of the
Korean Won in 2005.
(Fuel Efficiency)
The fuel saving policies of Korean Air place
emphasis on flight safety and comfortable
service. Also, we implement fuel saving
policies in line with the company wide environmental concerns to reduce greenhouse
gas emission, thereby preserving the environment for future generations. In 2006, we
promoted a total of 64 cases of fuel saving
measures throughout the sectors of flight
operation, maintenance, control, passenger, cargo and catering. 105,000 kiloliters of
fuel was saved, and fuel consumption per
flight hour was improved by 3.0% and 2.5%
in passenger and cargo operations, respectively. Our effort to save fuel also helped reduced CO2 emissions by 270,000 tons, contributing to the international campaign to
conserve the environment.
(Named Model Company in Industrial
Relations)
In March 2006, Korean Air received appreciation plaque from Federation of Korean
Trade Unions for contributing to the development of Korea's industrial relations by
maintaining good labor relations. In order to
overcome the historically high oil prices in
the past year, the labor union suggested
wage adjustment, without strings attached,
and the Company, in response, paid incentives and raised bonus rates by 50%.
(Contract to Purchase 25 of Boeing's
Latest Aircraft)
Korean Air signed a contract to purchase 25
aircraft from the Boeing Company. The contract with Boeing, valued at list prices of
US$5.5 billion, was the largest single contracted amount in Korean aviation history.
The contract will provide Korean Air with a
steady supply of the latest aircraft, from 2009
onwards, for 10 years. The 25 new aircraft
are comprised of ten B777-300ER passenger
aircraft, five B737-700/900ER passenger aircraft, five B747-8F freighters, and five B777F
freighters. Once joining our fleet, these nextgeneration planes will serve a pivotal role in
both providing our customers with excellent
service, and leading Korean Air into the competitive global aviation market.
(Mongolia Reforestation Program)
Korean Air held its third overseas training
trip. Korean Air's new employees visited
Mongolia to plant trees. In May 2006, a ceremony was held in Baganuur, the suburb of
Mongolia's capital, Ulaanbaatar. One hundred new employees participated in the
planting of 4,000 poplar trees across an
area covering 53,000m2. Dubbed "Korean
Air Forest," the area symbolizes the significance of the environment.
ACCOLADES & AWARDS
(Ranked 1st in the "2006 Customer
Satisfaction Surveys")
Korean Air ranked 1st in the air transport
sector of the "2006 Customer Satisfaction
Survey" by Korea Management Association
(KMA). We gained credit for the newly introduced corporate identity and flight attendant uniforms, the remodeling of our cabin
interiors and the improvement of our inflight services such as better catering and
entertainment programs. In addition,
Korean Air has been recognized for its investment in next generation craft employing cutting-edge technologies and full services, its plan to build a "one-stop service"
through the recently introduced e-ticket
service for domestic routes, and its introduction of kiosks at domestic airports.
(Operation Awards for B747-400, B777
and A330 On-Time Performances)
(Award-winning Korean Air In-flight Meals)
Korean Air received its second Mercury
After a strict review of both aircraft makers,
Korean Air received awards from Airbus
and Boeing for its on-time performance.
Among the six aircraft types it operated in
2006, Korean Air's on-time operation was
rated 1st place for its B747-400, B777 and
A330, in 2nd place for its B737-800/900 and
A300-600, and in 3rd place for its B747.
(Best Airline by ATW and TIME)
Korean Air received the Phoenix Award
from Air Transport World (ATW), a globally
respected monthly airline magazine, as
"The Most Successfully Transformed
Korean Air received the "Best Asia-Pacific
Airline MRO Operation of the Year Award" by
Aviation Week. Presented by the Aviation
Week Group, the MRO Asia Awards program recognizes companies operating in
the Asia-Pacific region, since 2001, for excellence in aviation/aerospace aftermarket
operations. Korean Air was awarded for its
success in developing a strong culture of
safety and its excellent improvement in the
areas of finance and operations.
Award at the 2006 International Travel
Catering Association (ITCA) annual convention. The award recognized Korean Air's
"Well-being" Korean in-flight menu and
specifically "Bibimguksoo," spicy Korean
noodles. Korean Air was also selected as
Asia's Airline of the Year at the 2006 PAX
Readership Awards by PAX International in
November 2006. These awards were given
in recognition of Korean Air's strong commitment to enhancing service. Examples of
such enhanced service are the continuous
development of new menu items such as
Bibimguksoo and home-style rice cooking,
the introduction of organic in-flight meals,
and the attention given to qualitative improvements such as strict hygiene control
and chef training.
Airline in the 21st Century." Korean Air was
also acknowledged as one of the best airlines in the world through the "2006 TIME
Readers' Travel Choice Awards. "The airline won "Best First and Business Class"
and "Best Mileage Program."
These recognitions are of significant importance so far as our thorough preventive
maintenance programs and safety measures, translate into high passenger service
and safety.
(Best Management, Repair and Overhaul
Operation of the Year)
2006 SUSTAINABLE MANAGEMENT ACTIVITIES
2007 SUSTAINABILITY REPORT
11
Company Profile
Sustainable Management
2007 SUSTAINABILITY REPORT
SUSTAINABLE MANAGEMENT
12
Harmony in the triple bottom lines contributes to sustainable future.
Korean Air's Value & Responsibilities
While pursuing balanced growth through
sustainable management, Korean Air fulfills its responsibilities towards the community, environment and economy; we
create values for all the stakeholders, we
are devoted to conserving the environment, and we are laying the foundation
for the sustainable growth of the
Company. Through all these activities, we
are devoted to building a sustainable society.
Social
Responsibility
VALUE
Economic
Responsibility
Environmental
Responsibility
● Social Responsibilities
Korean Air takes full responsibilities towards all its stakeholders including customers,
shareholders, investors, employees and business partners as well as the communities it
operates in. The Company provides both absolute safety and complete service to our customers throughout our flights. For the employees, Korean Air offers opportunities to help
foster professional expertise through education; in addition, Korean Air seeks to improve
their quality of life through performance based compensations. Korean Air also strives for
mutual benefits through a mutually beneficial strategy with its cooperative partners while
supporting the wider society through management sharing and social contributions.
● Environmental Responsibilities
The corporate activity of Korean Air inevitably gives rise to both noise and gas emissions.
Both take-offs and landings generate noise pollution and burn fossil fuels that cannot be
replaced, resulting in global warming and the depletion of global resources. Everyone at
Korean Air will strive to develop sustainable measures to minimize the affects on the environment, while satisfying the increasing demand of air transport.
● Economic Responsibilities
Korean Air will fulfill its economic responsibilities by continuously enhancing its value for
both the economy and society; for both corporations and individuals. We aim to achieve this
through expedient and convenient passenger and cargo transportation to all regions of the
globe, while contributing to balanced economic development and the creation of diverse job
opportunities.
Sustainable Management Activities
13
2006 Sustainability Aspects
Net Income
497.4
(KRW Billions)
SUSTAINABLE MANAGEMENT
2007 SUSTAINABILITY REPORT
Sales
8,077.8
(KRW Billions)
Passengers
Transported
Routes
95 Cities of
35 Countries
2,235
(10,000
Passengers )
Number of
Aircrafts
Owned
121 ASK
Cargos
Transported
212 (10,000 Tons)
(Available seat
kilometer)
ASK
(Available seat
kilometer)
71,894
(Millions)
RTK
(Revenue ton
kilometer)
13,663
(Millions)
Economic Aspects
Jet Fuel
Consumption
3,332,577
CO2 Emissions
11,594
Employees
14,755(Persons)
(Thousand Tons)
(5 point scale)
(Tons)
Waste
Recycling
Ratio
38%
Environmental
Expenses
9.7(KRW billions)
Environmental
Eduction
375 (hours)
2,251 (Persons)
Customer
Satisfaction
4,25
Noise
Charges
3.1 (KRW billions)
Energy
Consumption
Electric Power
121,123 (Mwh)
Water Consumption
1,532,562 (Tons)
Environmental
Audit
45 cases improved
78%
Dividends
Female
4,577(Persons)
Common Shares 3%
Preferred Shares 4%
31%
Wage &
Fringe
Benefits
1,116.0
Social Funds
13.1 (KRW Billions)
(KRW billions)
Education
9.0 (KRW billions)
Ratio of
Industrial
Accident
0.13%
(Per hundred ersons)
Environmental Aspects
Social Aspects
Relation With Stakeholders
Korean Air creates and distributes value for all its stakeholders including customers, shareholders, employees, business partners, and the wider community. For our customers, we continue our initiatives to improve service quality and customer satisfaction while placing customers' safety and health at the top of our priorities by thorough safety and security measures.
Stakeholders
Shareholder
Business Partner
・Fair Trade
・Ethical
・Fostering Talent
・Welfare
・Performance-based
compensation
Management
・Coexistent
Management
Stakeholders
Customer
・Customer
Satisfaction
Shareholder
・Transparent
Management
・Accountable
Management
・Dividend Policy
・Flight Safety
Society
・Social Contribution
・Environment
Preservation
For shareholders, we are enhancing shareholder values through advanced corporate governance and ethical, transparent and accountable management, as well as through an appropriate dividend policy. To help our employees reach their full potential, we invest in various training courses in order to reinforce both specialization and competency. Reorganizing the training programs, we are developing specialists with a global competitiveness. At the same time,
we also invest in the health and employment stability of our employees. In our relations and
daily transactions with business partners, we strictly abide by our fair trade regulations and
practice ethical management. Such practice and management can only be mutually beneficial
to all involved. For the communities we operate in, we implement both systematic environmental management and various programs toward social contribution. We believe our daily
activity contributes to the development of the community and helps towards building a sustainable future.
Company Profile
CORPORATE GOVERNANCE & CRISIS MANAGEMENT
2007 SUSTAINABILITY REPORT
CORPORATE GOVERNANCE & CRISIS MANAGEMENT
14
Enhanced corporate value through a
sound and transparent governance
structure
Establishing a sound corporate governance structure is the key to establishing
trust with stakeholders, such as shareholders, customers, employees and business partners, and indeed to enhancing
corporate value in the long-run. Based on
the authority delegated to Korean Air's
Board of Directors, diverse measures will
be taken to ensure that important corporate management issues are transparently and fairly discussed.
● Composition of the Board of Directors
The Majority of Korean Air's Board of Directors (BOD) comprises of non-standing directors. In
order to help the directors make informed decisions, a senior executive management member
of the Company will be present for each proposed agenda in order to provide sufficient background information that may be necessary. Furthermore, in operating the BOD, the schedules
will be prepared most efficiently.
Under the governing regulations, three subcommittees operate under the BOD: the Audit
Committee, the Management Committee and the Non-standing Director Nominating
Committee. In order to ensure independency and faithful execution of the audit process, the
Audit Committee will be comprised of all non-standing directors.
● Crisis Management
In business activities, a crisis can be defined as "events that can possibly pose threats not only
to the profits but also the very survival of an organization." A crisis, generally refers to emergencies and disasters, both natural and man-made.
Korean Air is clearly aware of the effects of preemptive risk factors, as well as natural disasters, on business practices and operates an internal risk management system to prevent and
manage risks and crises.
Subcommittees of the Board of Directors
Management
Committee
Audit Committee
・Auditing the conduct of
directors’duties and
investigating general
issues related to the
company
・Four non-standing
directors
Subcommittees of
the Board of
Directors
・Review and decisionmaking on the issues
commissioned by the
Board of Directors
・Two directors
・Two non-standing
directors
Non-standing Director Nominating Committee
・Recommending non-standing directors
・Two directors
・Two non-standing directors
To this effect, we have set up comprehensive internal crisis management guidelines to counter
various types of crisis such as flight accidents, hijackings, natural disasters, environmental
crises and disputes. For each type, we maintain manuals and guidelines which organizes a
company-wide system to initiate an emergency response in any given event. These systems
have been proven with several events in the past, helping us to effectively and quickly counter
the crises.
Looking forward, Korean Air places great importance on preemptive counter measures
against possible crises and will remain vigilant in detecting and countering all external and internal potential crisis that may arise. We will also remain vigilant to any risk that may affect
business operations by identifying any such risk at an early stage. In addition, we strive to optimize our crises management system faced with the ever changing circumstances in not only
business practices, but in the wider world today.
Company Profile
FLIGHT SAFETY POLICIES
FLIGHT SAFETY POLICIES
2007 SUSTAINABILITY REPORT
15
Continued safety investment guarantees comfortable and safe flight.
Aviation business characteristically calls
for thorough safety measures and Korean
Air is no exception to this policy. As our
number one priority,, Korean Air has established and operates an advanced safety management system. Our safety system has proven to be extremely successful as we recorded seven consecutive accident-free years from 1999 to 2006. In
addition, our aircraft ground accident ratio decreased by 84% from 2002.
● Safety Management System
Recently the aviation industry has experienced a paradigm shift in safety management system
from case analysis to a data-based safety management system. All safety related factors are
lodged in a database, pinpointing and pre-eliminating even minor irregularities.
Korean Air has also started a safety data management system. Korean Air has set the groundwork for risk factor analysis system through managing flight and ground safety data and
trends. All the data concerning safety factors will be lodged and computerized thereby enabling us to minimize and eliminate all factors of risk, which can often be so intangible. Within
the airlines industry, safety is an absolute value that cannot be compromised. While continuing
to provide convenience and comfort, Korean Air will also provide the utmost safety to its customers.
● Flight Visual System Utilizing Our Own Technology
Korean Air was able to develop a Flight Visual System (FVS) utilizing its own technology for
flight safety in 2005, and has applied it to all types of aircraft in its fleet. The FVS can simulate
the both the flights of aircraft and piloting, enabling a comprehensive review of any risk factors.
The results can be applied in training and operational procedures, thereby enhancing flight
safety even further.
● 2006 Flight Safety Performance
(Acquisition of IOSA Certificate)
Korean Air was both the first in Korea and the first among the SkyTeam alliance members to
receive the IOSA (IATA Operational Safety Audit) certification in 2005. In September 2006, again,
Korean Air passed the safety evaluation, and the 758 items of audit, to renew its two-year effect
certification in eight categories of flight operation. This second success in the safety evaluation
by the IOSA speaks volumes about Korean Air's global standard of safety level.
Flight Visual System
16
(Accident-free flight safety for seven years in a row)
As Korean Air puts a priority on flight safety, from 1999 to 2006, we have maintained an accident-free record. According to IATA statistics, the accumulative accident ratio of global members is estimated at 5.98 per 1 million flights annually.
2007 SUSTAINABILITY REPORT
FLIGHT SAFETY POLICIES
Accumulative Accident Ratio per 1 million Flights
(Unit: case/1million flights)
2002
2003
2004
2005
2006
Korean Air
0.00
0.00
0.00
0.00
0.00
IATA Avg.
2.92
3.79
4.57
5.33
5.98
(84% decrease in Aircraft Ground Accident Ratio)
Korean Air's accident rates, on the ground, has continued to decrease over the past five years
to reach 0.20 cases per 10,000 flights in 2006, down 84% from 2002, a considerably low figure
compared to the 1.25 per 10,000 flight rate average for the global airline industry as a whole. In
2007, our campaign to prevent the number of ground accidents will continue with preemptive
measures and systems and by further establishing safety awareness in the corporate culture.
Aircraft Ground Accident Ratio
(Unit: case/1million flights)
2002
2003
2004
2005
2006
Korean Air
1.26
0.98
0.63
0.21
0.2
IATA Avg.
1.88
2.4
1.61
1.39
1.25
● Aviation Security
(Counter Terror Measures)
Korean Air has upgraded its aviation security against external risk potentials. In order to prevent breaches of security, Korean Air plans to both renew and increase its cargo inspection
equipment. Korean Air, besides conducting systematic risk analysis, has also upgraded its
"Aviation Security Information Management System" and "Preemptive Risk Analysis System"
in order to establish preemptive security through prompt and efficient reporting on any information that may be connected to security.
Korean Air has also developed and put in place an e-learning airline security course to provide
efficient, standardized airline security training in both Korean and English. Besides being utilized by security staff, this program is used in the training of all employees. To prepare for possible terrorist attacks during flight, Korean Air held training sessions based on various scenarios. Such scenarios included armed guards entering the aircraft, a simulated exercise in coordination with the police, and another testing reaction to bomb threats. These training sessions
are also scheduled for 2007.
Company Profile
ETHICAL & TRANSPARENT MANAGEMENT
ETHICAL & TRANSPARENT MANAGEMENT
2007 SUSTAINABILITY REPORT
17
Ethical management, fair trade and
transparent accounting systems build
a respected company.
Since the institution of its ethical charter,
Korean Air has established concrete ethical norms and execution policies to establish corporate ethics in our day-to-day
business. As well, we comply with fair
trade regulations and operate internal
audit systems to establish transparent
management in our daily business practices.
● Ethical Management as Part of Daily Activities
To emphasize sincerity and transparent management, Korean Air obliges new employees to complete corporate ethics classes and to sign the Ethical Charter. Approximately
1,000 employees took 14 courses in 2006. In addition, we encourage ethical management
throughout the workplace by providing our people with easy access to corporate ethics
information and training materials through the company's intranet.
In 2006, the Ethical Guidelines were revised to facilitate making them part of our day to
day business. Korean Air also strives to establish a transparent relationship with all
stakeholders by announcing its commitment against bribery or any other inequitable
transactions within the company and all related firms.
● Operating Corporate Ethics Organization
Korean Air operates an Ethics Office under the Audit Division that oversees the implementation of corporate ethics in order to support and establish them throughout the various departments in Korean Air. An employee in charge of ethics is appointed in each
department to prevent behavior that may violate the code of ethics.
● Maintaining a Policy of Reporting Internal Irregularities
Korean Air maintains an "Internal Misconduct Reporting System" to eradicate internal
solicitations, irregularities and misconducts in transactions with related firms. Any
reports will initiate a thorough process to verify any irregularities or inefficiencies in
policies and habits.
● Establishing an Ethical Management Network
Korean Air makes an effort to establish ethical management in all corporate activity.
Through corporate ethics management forums, seminars and various other activities,
sponsored by the Federation of Korean Industries and Korea Employees Federation, we
will exchange information and benchmark success stories, while establishing ethical
management networks within our various organizations.
2007 SUSTAINABILITY REPORT
ETHICAL & TRANSPARENT MANAGEMENT
18
Korean Air's Ethical Management System
Enhance competitiveness of
corporate
ethics
Establish ethical
management
network
between companies and outside institutions
Strengthen ethical awareness
for all employees and management
ETHICS
Operate an
internal
misconduct
reporting
system
Emphasize ethical
compliance by
cooperative firms
Operate an ethical
office and internal
ethical manager
system
Korean Air's Ethical Charter
Korean Air strives to promote mutual prosperity for both itself and the community. We hold
transparency and responsibility as management principles, respect the competitive free
market, and emphasize corporate activities that abide by rules and regulations.
- We maintain customers' satisfaction and safety as our highest priority.
- We place our utmost effort to maximizing shareholder value for our investors.
- We fully respect each employee and make efforts to enhance their quality of life.
- We promote joint development with our cooperative firms, based on mutual trust.
- We respect free competitive principles and will lead the sound development of the airlines transportation industry.
- We actively contribute to the sound development of our country and society and to the
preservation of the environment.
- We acknowledge the corporate principles set forth by the Company and uphold our
obligations and responsibilities.
● Fair Trade Self-observance Program
Korean Air has introduced the "Fair Trade Self-observation Program", an internal regulatory
system that encourages compliance with the spirit of fair trade acts and regulations. In line
with the strong will of the executive management for fair trade business practices as announced in 2004, the Fair Trade Self-Observation Program was put in place in answer to international calls to prevent and avoid unfair and illegal conferences.
● Internal Control System
In a bid to improve transparency in the accounting system, and reliability in financial information, in 2005, we established an internal accounting audit team besides further advanced internal control systems. This has significantly enhanced efficiency in the internal accounting system. Also, monitoring is made on a regular basis on the system.
Company Profile
INDUSTRIAL SAFETY
INDUSTRIAL SAFETY
2007 SUSTAINABILITY REPORT
19
Industrial Safety
● Internal Accident-free Campaign
Korean Air has promoted industrial safety on the premises through an internal company incentive program; "Company Accident-free Campaign." To achieve accident-free industrial
sites, Korean Air has promoted friendly competition among divisions by encouraging business
units to develop safety management techniques. Based on their performances, divisions were
awarded various incentives. Through the self-observed industrial disaster prevention activities, Korean Air's industrial accident rate has decreased every year. Recording 0.13% in 2006,
Korean Air's industrial accident rate has remained around a stable ratio of 0.1% for four years
in a row. This was the result of the Company's accident-free campaign which promoted voluntary safety management.
Industrial Accident Trend
1
0.90
0.77
(Unit: %)
0.85
0.77
0.77
0.60
0.49
0.5
0.36
0.10
0.15
0.09
0.13
0
2001
2002
2003
2004
2005
Korean Air is devoted to building an accident (and disaster) free workplace. We have an evaluation system on the health and safety activities in the work place including the catering center.
We also motivate our people to practice safety guidelines with incentives, based on the annual
assessment by Aeromedical Service Team and Security & Compliance Office, which are distributed in proportion to the level of achievement. The Security & Compliance Office conducts
on-site verifications whenever the goals are achieved and shares information with each department for continuous improvement. Korean Air will continue to make every effort to promote a safer workplace through the development of industrial safety management policies.
2006
Domestic Industrial Accidents
One-year Accident-free by Cabin Crew Members (473 cabin crews of the International 3 Group)
Korean Air's Industrial Accidents
The accident-free campaign between our cabin crew members is rooted in our strong belief that the
excellent customer services arise from a healthy mind and body. Our cabin crew members practice
stretching, and are reminded of service safety codes during preflight briefings, and continue
healthcare practices through to post-flight stage. These efforts have had significant results.
Furthermore, Korean Air will continue its effort to form a healthy and safe workplace in the future.
Accident-free Benefits
(Unit: In millions of KRW)
291
300
259
Korean Air's manufacturing facilities have all acquired the government-promoted Safety &
Health Management System (KOSHA 18001) in order to prevent industrial accidents and develop good working conditions. In order to apply safety management systems, systematically and
efficiently, to all its manufacturing facilities, Korean Air formed the Industrial Safety & Health
Committee and Safety Health Council, fostering safety experts and providing its people with
education on safety.
250
200
170
134
150
108
102
2001
2002
100
50
0
2003
2004
2005
● Industrial Safety Management System
2006
Social Value & Responsibilities
Improving Customer Service
● Innovative In-flight Service
As part of the seat upgrading initiatives
Korean Air pursues the happiness and prosperity of all stakeholders
such
as installed Kosmo
since 2005, Korean
Air has
in first class
customers, employees, partners and communities. Korean AirSleeper
strives Seats
ceaselessly
to and Prestige
Plus Seats in business class. In particular,
provide the best services for customers, job satisfactionthe
forPrestige
employees,
andare highly recogPlus Seats
for their comfort
comparable to first
development for both national and international communities.nized
Throughout
all these
class. Furthermore, the AVOD* system, installed in every seat including those in economy class, serves a variety of amusing
movies, music, and games. To aid the passenger, in finding their way around this
wealth of entertainment, we have launched
the in-flight entertainment magazine
"Beyond." In addition, we have introduced
amenity kits, for long-haul economy passengers, free of charge. Korean Air has continued various campaigns to enhance cabin
service quality.
efforts, Korean Air makes beautiful flights toward a brighter future together with its
stakeholders.
4.17
4.20
2004
2005
In 2006, we initiated the "Customer Value
Creation Campaign," in a three step
process, to provide our customers with the
same level of quality service regardless of
destination or route. Through the cabin
crew internal website, we share useful advice on how to serve passengers, from various countries with different tastes and
characteristics, and guidelines for explainthe in-flight menu. This website also
five)
*Customer Satisfaction Score (on a scale of one toing
provides information on flight common
sense and basic aircraft theories. We have
strengthened cart handling guidelines to
prevent cart injury.
4.25
2006
● Expansion of IT Services
Korean Air operates a global one-stop service website, enabling customers to reserve seats, purchase tickets and make inquiries on frequent-flyer programs from
anywhere in the world. Also, the
"International Internet New Reserva-tion
System" enables domestic flyers to make
airfare inquiries and purchase requests
more conveniently.
We have also expanded the e-Ticket service
SOCIAL VALUE & RESPONSIBILITIES
RESPONSIBILITIES & OBLIGATIONS TO CUSTOMERS
2007 SUSTAINABILITY REPORT
RESPONSIBILITIES & OBLIGATIONS TO CUSTOMERS
22
We strive for differentiated services
and excellent customer satisfaction.
Korean Air continues to strive towards
providing the most excellent customer
services such as improving cabin and cargo services, conducting service innovation campaigns and introducing state-ofthe-art IT systems. Our "Voice of
Customer" initiatives and customer satisfaction surveys have helped us stay connected to customer demands and have
accordingly enhanced customer satisfaction.
* Audio Video on Demand
** e-Customer Service Platform
*** Terminal Management System
Improving Customer Service
● Innovative In-flight Service
As part of the seat upgrading initiatives
since 2005, Korean Air has installed Kosmo
Sleeper Seats in first class and Prestige
Plus Seats in business class. In particular,
the Prestige Plus Seats are highly recognized for their comfort comparable to first
class. Furthermore, the AVOD* system, installed in every seat including those in economy class, serves a variety of amusing
movies, music, and games. To aid the passenger, in finding their way around this
wealth of entertainment, we have launched
the in-flight entertainment magazine
"Beyond." In addition, we have introduced
amenity kits, for long-haul economy passengers, free of charge. Korean Air has continued various campaigns to enhance cabin
service quality.
In 2006, we initiated the "Customer Value
Creation Campaign," in a three step
process, to provide our customers with the
same level of quality service regardless of
destination or route. Through the cabin
crew internal website, we share useful advice on how to serve passengers, from various countries with different tastes and
characteristics, and guidelines for explaining the in-flight menu. This website also
provides information on flight common
sense and basic aircraft theories. We have
strengthened cart handling guidelines to
prevent cart injury.
● Expansion of IT Services
Korean Air operates a global one-stop service website, enabling customers to reserve seats, purchase tickets and make
inquiries on frequent-flyer programs
from anywhere in the world. Also, the
"International Internet New Reserva-tion
System" enables domestic flyers to make
airfare inquiries and purchase requests
more conveniently.
We have also expanded the e-Ticket service
to international routes and operate kiosks in
domestic airports, simplifying and shortening the boarding process.
In October 1, 2006, we launched the "Mobile
SkyPass" service, the first Korean airline to
do so. Utilizing the convenience of mobile
devices, a single downloading of SkyPass
membership information to the cellphone
enables our passenger to not only reserve
and purchase tickets and board, but also
economize their effort to accrue miles.
These advanced IT-based services both improve customer satisfaction and productivity, while saving resources.
● Improved Cargo Management Service
Korean Air operates the e-CSP** which enables our customers to monitor their cargo,
from reservation to arrival, on line. As part
of our plan to establish a global automated
terminal system, we are expanding our
TMS*** operation from the current ports of
Incheon, New York and Los Angeles to
Chicago, Atlanta and Dallas besides others.
● Voice of Customer (VOC)
Based on its management principle to reflect various voices in the field, Korean Air
has fully benefited from using the VOC in
managing field operations and identifying
service trends. Through the website and
suggestion boxes, Korean Air receives
about 70,000 compliments, inquiries, and
complaints annually from Korea and
abroad. In 2006, the number of complaints
received decreased by 5% year-on-year
thanks to less complaints directed at systems and functions such as Skypass and the
Internet.
● Service Improvement.Evaluation
Committee
The VOC ultimately aims to provide services
that satisfy customers. Service improvement tasks identified through quality measuring exercises, such as surveys and
analysis, are delivered to the relevant departments in order to achieve tangible improvements. The Service Improvement and
Evaluation Committee is in charge of disclosing the details of the VOC, and the resulting improvement tasks, on the intranet
system. This effort is made to encourage
more participation and support for service
improvement activities. The excellent feedback process on the VOC helps to address
weaknesses in services while, at the same
* Service Quality Indicator
time, providing ideas for improving the
quality of service and developing new products.
Customer Satisfaction Trend
(on a scale of 5)
5
4.17
4.20
4.25
4
3
● Customer Satisfaction Research
The results from Korean Air's semi-annual
international passenger customer survey
provide a wealth of information on customer
satisfaction levels, and their changing
trends. This survey is categorized by customer type, customers' needs, and satisfaction levels. The total score from the recent
customer satisfaction research shows continuous improvement in Korean Air's services.
2
1
0
2004
2005
2006
● Service Quality Evaluation
Through the internally developed Customer
Survey─a qualitative evaluation method
and the SQI*─ a quantitative evaluation
method, Korean Air calculates the weighted
average of six core factors, relating to airline transport services, on a quarterly and
yearly basis. The six core factors include the
figures of flight delays, non-boarded reserved seats, luggage-related incidents,
customer complaints, lost calls, and lastly,
delayed mileage inputs. This is an excellent
managerial tool for an objective evaluation
of Korean Air's capabilities and performance as it is based on the performance results of certain sectors. The most recent
evaluation indicated improvements in service quality and internal business performance.
● Awards & Accolades from Outside
Due to our continuous effort for service innovation, Korean Air was awarded the No.1
place in the 2006 customer satisfaction index by Korea Management Association
Consulting. Korean Air was also selected as
the 'Best Company of the Year 2006' in the
airline transportation category by Economic
Review, a weekly business magazine. Also,
on the global front, the airline won top honors in two of the three categories in Time
Readers' Travel Choice Award, which is
based on a readers' survey. It also received
the prestigious Mercury Award from the
International Travel Catering Association
for its in-flight meal, Bibimguksoo, and first
place, in the business class white wine category, from the coveted Cellars in the Sky
2006 award. Furthermore, it was selected
as "Asia's Top Airline" by Pax International.
All of these awards are clear testimony to
Korean Air's excellent in-flight services.
● Policies Related to Customer Privacy
Korean Air is implementing customer information management guidelines so that
customers can use online services freely,
without concerns over the misuse of private
information. Authorization, by Information
Security Management System, is applied to
the Internet reservation ticketing system to
ensure safe and secure online transactions
for our customers.
23
2007 SUSTAINABILITY REPORT
RESPONSIBILITIES & OBLIGATIONS TO CUSTOMERS
Customer Satisfaction
Social Value & Responsibilities
RESPONSIBILITIES & OBLIGATIONS TO EMPLOYEES
2007 SUSTAINABILITY REPORT
RESPONSIBILITIES & OBLIGATIONS TO EMPLOYEES
24
Korean Air seeks to realize not only the
growth of the company, but also that of
its employees, Korean Air will seek to
help them achieve their goals and enjoy a more prosperous life.
Korean Air believes that human resources
are at the heart of any company. Based on
this philosophy, in promoting the growth
of its employees, the airline is also promoting the growth of the company.
Through systematic training, fair evaluation, and reasonable compensation,
Korean Air strives to support employees
in realizing their dreams and enjoying a
better life. Korean Air believes this is an
essential component in realizing its vision
to be the leading global carrier of the 21st
century.
● Personnel Philosophy
In recognizing that people are valuable assets of a company and a company grows through the
growth of its people, the personnel philosophy of Korean Air aims for the simultaneous development of the company and its employees. This philosophy, reflected in its HR principle and a
model employee type, forms the basis of the airline's HR management. Korean Air works hard
to provide employees with a comfortable working environment, both mentally and physically,
so that they can develop into both the best and most respected experts in their respective
fields.
Korean Air's Personnel Philosophy
People are the Company's Most
Valuable Resource
Company Grows through the Growth
of its People
Seek to Simultaneously Develop the
Company and the People
The Company is Humanity
Korean Ai r 's Personnel Philosophy
● Human Resources Management
HR System
Operational Direction
Korean Air promotes an integrated human resources system which closely links training,
evaluation, and compensation. Korean Air is aware that our people play an important role in
achieving our goal of becoming a leading global carrier in the 21st century. Therefore, we take
multiple approaches to the integrated HR system according to diverse job compositions, encouraging and instilling our people with motives for realizing their full lengths of potentials.
Enhanced Quality of Life
Individual
Individual Growth
Provide a Sense of
Accomplishment,
Satisfaction, and
Motivation
Contribution Enhancement
Enhanced Utilization of
Individual’s Value
Foster
Evaluation
Compensation
Provide Opportunities
Fairness
Objective
Company
21C Global Leading
Carrier
Equitable
Operational Standard
Fostering Talent
● Systematic Training by Job Level
Korean Air provides training courses specific to job levels with a special emphasis on administrative management and job execution skills. Administrative management courses include basics in airline management, compulsory courses [for deputy general managers], MBA, and
KEDP*, all of which are designed for different job levels up to the executive level. Executive
training focuses on KEDP, leadership and strategic thinking, organization management, and
negotiation skills. Job execution skill courses are offered for employees below the general
manager level. Among the courses is training on problem solving, which uses statistic to address existing challenges in the field, and basic training on statistical analysis, which is mainly
designed for staff departments.
*KEDP (Korean Air Executive Development Program): A course for the enhancement of Korean Air executives' managerial capacity.
Basic Fostering Structure
25
Management
Development
Expected Role
Utilization Target
Executive
Enhance
Management
Capabilities
Management
Capabilities
Enhancement Course
Senior
Manager
Strategic
Utilization
Administrative
Capabilities
Development Course
Middle
Manager
Working
Level
Job Expansion
Job Utilization
MEA
Check Job
Appropriateness
Foster Job Skills
MBA
Living Abroad
General
Management
Course
Short-term
Overseas Dispatch
Problem Solving
Capabilities
Enhancement Course
Airlines Management
Basic Course
English/
Second Foreign
Language
Enhancing Job
Capabilities
Active
Organization
2007 SUSTAINABILITY REPORT
RESPONSIBILITIES & OBLIGATIONS TO EMPLOYEES
Classification
Strengthening
Global
Competencies
Training from
Specialized Training
Institutions
CDP (Career
Development
Plan) Specialized
Organization or
Onsite Training
Working
Excellence
● Professional Training Organizations for Each Area
Korean Air's training programs are divided into education for all employees, and training for
specific job functions. Training organizations also have a dual structure: the first component is
the Human Resources Development Center, which provides education on administrative management, organization revitalization, services, foreign languages, and IT. The other component
consists of job-specific Training Centers for cabin crew, maintenance staff, flight crew, and
passenger and cargo management staff. We also operate Human Resources Development
Center (Deugnchon-dong, Seoul) and the Comprehensive Training Center (Giheung-eup,
Yongin-si) for camp training. The Cabin Crew, Repair, and Flight Crew Training Centers are
equipped with facilities required for systematic and intensive job training and practices.
Training Results
Classification
2006
Total Training Man-hours
1,342,394
84
Training Hours per Person
Total Training Expense (KRW millions)
Training Organization
560,000
Training Expense per Person (KRW)
Central
Training
Organization
● Promotion of Online Training
Human Resources
Development Center
Human
Resources
Development
Center
Flight Crew
Training
Center
8,959
Shingal
Training
Center
Training System
Service
Academy
Special characteristics of the airline service industry makes it difficult to provide education
programs of the same level, and at the same time, due to various time shifts, diverse job functions, and differing levels of work required for various positions. In addressing this challenge,
Korean Air has developed approximately 100 online courses which cover job competency
training for a better managerial capability, foreign languages, IT, as well as other fields requiring practical knowledge. Korean Air plans to introduce compulsory courses, for each job level,
in order to ensure competency for any given job.
Online Program Operating Results
Maintenance
Training
Center
Cabin Crew
Training
Center
Classification
Number of Training Courses
Number of Registrants (Person)
Specialist
Training
Organization
Total Man-Hours
2005
2006
188
229
52,302
102,297
519,370
696,218
26
● Strategy to Foster Core Personnel with Global Capabilities
2007 SUSTAINABILITY REPORT
RESPONSIBILITIES & OBLIGATIONS TO EMPLOYEES
Since 2003, the managing directors at Korean Air have gone through KEDP (Korean Air
Executive Development Program), a customized MBA program which was jointly developed
with Seoul National University's School of Business Administration. Executives taking this
compulsory course take three months off work responsibilities in order to focus intensively on
the program. KEDP covers the study of major business administration theories, case studies,
which center on core competencies as executives, and project execution, which can contribute
to improvement in field operations. In a further effort to foster future leaders, Korean Air annually selects 10 talented employees to support in their study of prestigious MBA courses at
home and abroad.
● Standardizing Service-related Training
Leading the global standards in every field of the airlines industry such as passengers, cargo,
flight, cabin, and maintenance, Korean Air has set out to standardize service-related training.
This is an effort to provide Korean Air customers with the same kind of high-quality service experience found anywhere in the world. Standardized service-related training is offered to both
employees and managers who are in direct contact with customers to ensure service consistency.
Compensation Structure and Welfare & Benefits
● Compensation Structure
Korean Air's compensation aims to reward employees differently, yet reasonably, based on
their individual performances while at the same ensuring the basic standard of living. In order
to better support the livelihood of our employees, the company seeks to provide Total
Compensation, which offers a variety of welfare programs, benefits, and monetary rewards.
● Pension Structure
In accordance with the National Pension Act of Korea, all employees of Korean Air must subscribe to the National Pension Plan while subscription to the Individual Pension Plan is optional with the support of the company. According to the 1995 agreement between labor and management, Korean Air provides KRW 50,000 monthly support to employees, in the 18 to 60 year
old age bracket, for their Individual Pension Plan while they can choose to pay more in premiums. As of December 2006, 15,033 employees [ 94% of our total number] benefited from the
Individual Pension Plan, as assisted by Korean Air.
Compensation System
BENEFITS
Medical Allowance/Pension
Airline Ticket Support
● Housing/Tuition Allowances, etc.
●
●
TOTAL
COMPENSATION
INCENTIVE
●
●
Performance-based Bonus
Safety Subsidy
●
Establish Basic Wage by
Function/Title
Apply partial Annual-based
Pay System
2006 Wage and Incentive Status
●
●
Regular Bonus: 800%
Performance-based Bonus: 100% Paid
(Unit: In billions of KRW)
2003
2004
2005
2006
National Pension
25.6
27.1
27.8
28.8
Individual Pension
11.1
11.1
10.2
11.1
Total
36.7
38.2
38.0
39.9
15,908
15,103
15,134
15,033
Individual Pension Beneficiaries (Persons)
PAY
●
Beneficiary Status
● Welfare & Benefits
In line with a corporate culture that seeks customer satisfaction, Korean Air features a variety
of welfare and benefit programs for employees to ensure their stable livelihood. Given we are
an airline, these programs can offer unique benefits such as support for airline tickets.
Welfare & Benefits Policy
Housing Support
27
Owns 2,200 houses in Incheon, Gimhae, and Jeju
Korean Air Affiliated Medical Center
60 professional medical staff in residence
- Comprehensive health management for all employees with
consideration of the characteristics of the airline industry
- 1st stage medical services
- Designated as a center for a health check-up of flight/cabin crew
- Provides health management for all employees
(Special categories included)
- Provides basic physical evaluation and consulting on exercise
- Provides consulting on nutritional intake
- Other work on employee health management
Children Tuition Support
- Support for middle school / high school / university tuitions
- Tuition support for children studying overseas and
for employees working abroad
- Childcare support for female employees
- Graduate school scholarship for employees
Airline Ticket Support
- Discounts on domestic / international flights
Harmonious Labor-Management Relations
Employees by Gender
● Working of Two Labor Unions
Unlike most Korean companies, Korean Air has two types of labor unions. One is a labor union
composed of general employees, and the other is a pilots' union. These two labor unions separately hold a quarterly labor-management council, an annual wage bargaining and agreement, and revise or conclude a collective agreement every two years.
31%
Labor Unions Status
Total 14,755 persons
Category
(Unit: persons)
Number of
Employees
Labor Union
Members
Rate
Note
69%
Korean Air Labor Union
(Overall employees' union)
Korean Air Pilots' Union
male
13,250
9,360
70.6 %
Non-regular workers and
employees hired by overseas
sites not included
1,806
1,278
70.7 %
Foreign pilots not included
female
● Harmonious and Mutually Beneficial Labor-Management Relations
Overseas Local Employees
(Unit: persons)
207
342
Based on the philosophy of mutual respect, participation and cooperation, dialogue and compromise, the labor and management of Korean Air is fully committed to seeing the company
grow into a leading global carrier of the 21st century. Korean Air offers various cultural and
welfare programs to employees and their families to bring more happiness and prosperity to
their lives. Events held include an annual marathon competition, a pottery-making experience,
a trip to tidal flats, and visits to performances such as 'Jump' and 'Tokebi Storm', all of which
offers a unique program that differentiates Korean Air from other companies.
Korean Air People
Total 1,565 persons
461
Category
346
Ground Support
Flight Attendance
Technical Support
Others
General
Cockpit Crew
Flight, Manufacturing
IT, Research,
Working
Administrative,
Cabin Crew
Technology Support,
Catering, Others
Yrs.
Financial, Sales, Transport
Total
Avg.
Communications Facilities,
Flight Maintenance
209
Japan
America
China
Southeast Asia
Europe/Middle East
Male
2,405
2,252
5,173
348
10,178
Female
1,785
2,753
20
19
4,577
9.29
Total
4,190
5,005
5,193
367
14,755
13.83
* The 1,565 overseas regional staff are excluded. * Executives are excluded.
15.88
2007 SUSTAINABILITY REPORT
RESPONSIBILITIES & OBLIGATIONS TO EMPLOYEES
Provides financial support for home purchases and leases
Social Value & Responsibilities
HEALTH
2007 SUSTAINABILITY REPORT
HEALTH
28
The Aeromedical Service Team is committed to providing diverse aero-medical services to all employees and passengers to ensure their good health, as
well as safe and comfortable flight.
Korean Air has a 2,148㎡-wide headquarter health center equipped with medical
equipment and facilities similar to those in
university hospitals, and Gimhae regional
health group that is in charge of caring for
employees in Gimhae. Headed by a professional manager, the Aeromedical Service
Team consists of 60 aero-medical service
experts including doctors, nurses, clinical
exercise professionals, nutritionists, industrial hygienists, clinical laboratory
technologists, and radiation technologists.
Health
● Employee Health Services
(Offering 1st stage medical services )
Korean Air provides employees with both the care of professional doctors and medical treatment. Various medications are always in place for emergency first aid. Equipment such as Hot
Bags and Aqua PT are offered at healthcare offices to treat bone and muscle conditions. First
aid kits are prepared at all workplaces so that employees can immediately, and conveniently,
receive the required care whenever and wherever it may be needed.
(Programs for a Better Health)
Korean Air provides employees with a chance to consult with experts in receiving advice on
how to improve their dietary habits, exercise, and overall lifestyle. The airline offers a variety of
specialized health programs according to the types of positions. Programs such as a measurement of physical strength, and a smoking cessation clinic are offered to flight crew, whereas
industrial disaster prevention programs, and a rehabilitation program are offered to cabin
crew.
(Airline Physical Fitness Management)
As flight crew are responsible for airline security, Korean Air comprehensively manages their
health and evaluates their physical fitness for employment within the airline industry. The airline is delegated, by the Ministry of Construction and Transportation of Korea as well as the US
Federal Aviation Administration, to issue and manage medical certificates for the physical fitness of crew.
(Managing Industrial Hygiene and Working Environment)
Korean Air conducts a regular check of work sites to ensure a clean and safe environment for
industrial workers such as aircraft maintenance engineers. This is also important in making
certain the health of workers is protected. Working conditions are managed and adjusted accordingly.
● Customer Healthcare Services
(Airline Transport of Invalid Passenger)
After checking whether airline transport can be possible for an invalid passenger, to ensure his
or her comfortable journey and prevent a possible emergency return, Korean Air offers appropriate in-flight medical services according to the passenger's condition.
(In-Flight Emergency Medical Training)
Cabin crew members receive regular training on how to manage a possible in-flight medical
emergency. As they complete the courses of Emergency Medical Technician, they can administer in-flight emergency care such as CPR.
(In-Flight Medical Equipment Management)
Through continuous monitoring, Korean Air strictly manages in-flight medicine and medical
equipment (Emergency Medical Kit, Medical Bag, First aid Kit, Resuscitator Bag, AED).
2006 Health Management Activities Status
(Unit: persons)
General Medical
Examination
9,551
Airline Physical
Fitness Evaluation
3,011
Cabin Crew Physical Strength
Measurement
4,910
1st Stage Medical Service
(Outpatient treatment)
9,748
Airline Transport
of Invalid Passengers
1,903
0
2000
4000
6000
8000 10000
Social Value & Responsibilities
COEXISTENT MANAGEMENT
COEXISTENT MANAGEMENT
2007 SUSTAINABILITY REPORT
29
Korean Air realizes the true meaning
of coexistent management through a
strong partnership with domestic and
overseas business partners.
Korean Air's coexistent management is
promoted both at home and abroad in diverse ways. Korean Air provides technical, financial, and quality support to domestic business partners to lay the foundation for mutual growth. The strong
partnership is also enjoyed on a global
level with the members of the global airline alliance SkyTeam to provide the
world best airlines services.
Coexistence with Business Partners
● Support for Business Partners
Pursuing mutual growth with business partners, Korean Air has continuously reviewed and
monitored the existing methods of procurement, management and evaluation systems for
business partners. In line with this approach, Korean Air has strengthened its criteria for business partners and graded them on the basis of their finance, staff, facilities, quality, and working environment. Business partners with excellent results are awarded with incentives, such
as further business opportunities, while those below the criteria are first given an opportunity
for improvement then, failing this, excluded from further business. Korean Air also promotes
joint technology development and mutual support with business partners during product design and review stages. This enables the development of optimal products, the reduction of the
supply period, and the generation of optimal costs.
● Business Partner Quality Control
Korean Air is complying with internationally authorized quality standards by joining, in 2001,
the Coordinating Agency for Supplier Evaluation (C.A.S.E), which strictly manages the quality of
business partners. About 85% of our 440 partners are registered as companies under the
C.A.S.E management.
SkyTeam
In line with its drive to embrace global standards, Korean Air has participated as a founding
member of 'SkyTeam', a global airline alliance formed in 2000, and has been an active member
ever since. As the second largest global airline alliance, SkyTeam strives to present further
convenient and consistent services such as reciprocal frequent flyer program, the lounge program, single check-in, and members' joint purchasing.
In April 2006, Russia's largest air carrier Aeroflot was welcomed as the 10th member of the
global airline alliance. The addition of Aeroflot has strengthened the SkyTeam's network in
Russia and East Europe, and provided customers with more chances to earn miles for their
flights. Featuring more diverse and convenient flight schedules and services, SkyTeam has also completed code share arrangements and system connections with 7 airlines including
Continental Airlines, AeroMexico, and Kenya Airways. In addition, under the agreement of June
2006, to extend the membership to China Southern Airlines by the end of 2007, Guangzhou
Baiyun International Airport will be added as a new hub airport, which will serve to strengthen
the alliance's network in China.
Social Value & Responsibilities
SOCIAL CONTRIBUTIONS
2007 SUSTAINABILITY REPORT
SOCIAL CONTRIBUTIONS
30
Korean Air seeks to create a happier and healthier society through active social contribution activities.
Korean Air's Major Social Contribution Activities
Korean Air promotes social contribution activities
in diverse areas such as education, culture, art, and
sports, and capitalizes on its capabilities as an airline to support its fleets as transportation for humanitarian relief activities. The Social Volunteer
Group is at the center of Korean Air's volunteer activities and aims at creating a brighter and healthier
society.
Disaster Relief
Category
2006
Educational & Cultural Activities
Academic and Scholarship Support,
Sport and Artistic Activity Support
Emergency Air Transport Support for
Disaster Areas
Other Volunteer Activities
Sponsoring of Sister Organizations, Fund
Raising for Helping the Needy,
Volunteering by Employees
● Disaster Relief Support
Korean Air has continued to promote volunteer activities by capitalizing on its expertise in cargo transportation. Since the launch of
the Disaster Support Team in 1997, Korean Air has provided humanitarian support, free of charge, by allocating special fleets and
helicopters to transport relief items and save lives.
In 2004, Korean Air committed two B747-400 fleets to transporting
relief items to the victims of the Yongcheon station explosion in
North Korea. In 2005, Korean Air provided the air transport of relief items to tsunami victims in Indonesia and neighboring countries, as well as to the victims of hurricane Katrina in the US. When
Gangwon-do was hit hard by severe flooding in July, 2006, Korean
Air offered donations and sent 6,000 boxes of bottled water to the
residents of Yangyang, Inje, and Pyeongchang. Korean Air's commitment to caring will ever continue through its active participation in relief activities.
SOCIAL CONTRIBUTIONS
2007 SUSTAINABILITY REPORT
31
● Overseas Training Support for the Disabled Youth
● Employees' Voluntary Fund-raising
As a sponsor of 'Dream Team's Great Steps into Six Continents', a
first-ever overseas experience program for the disabled, Korean
Air provided air tickets for the participating youth. Korean Air has
actively supported the program so that disabled, yet capable, young
talent can be identified and nurtured into global leadership. The
sponsorship is also aimed at raising awareness of the disabled.
Since 2003, all Korean Air employees have voluntarily donated several hundred won from their salaries (less than 10,000 won for executives) while the airline has also committed a matching amount.
Valuable social volunteering funds, raised through donations, have
been used to support various volunteering groups led by employees.
● Support for Childhood Cancer Patients' Trip to Jeju
Change Fund Raising Movement Status (Dec. 2003~Dec.2006)
In September 2006, Korean Air sponsored a three-day program,
prepared by Korea Childhood Leukemia Foundation, for child cancer patients to travel to Jeju Island. Wishing this program would
help to rekindle their hope, Korean Air supported air tickets for approximately 40 patients and their family and offered a visit to its
Jeju Flight Training Center.
Volunteering by Employees
● Korean Air's Social Volunteer Group
Seeking to fulfill its corporate social responsibility, and thus evolving into a respected company that stays ahead in global competition, Korean Air established the Social Volunteer Group under its
General Affairs Division to facilitate social contributions. The Social
Volunteer Group provides official support to the voluntary activities
of 19 internal volunteering groups, and also conducts its own volunteering activities based on an annual plan. The Group's work includes the management of funds raised from volunteering activities and support for the creation of new volunteering groups.
(Unit: KRW)
2006
Total Funds Raised
513,178,599
Total Payment
252,144,040
Balance
261,034,559
● Bazaar 'Sky Love'
In May, 2006, the Goni group (female crew) and the Seungu
group(male crew), which are volunteering communities of Korean
Air's cabin crew members, held a bazaar 'Sky Love' at the Human
Resources Development Center in Seoul. On sale at this charity
bazaar were approximately 10,000 items of clothes, souvenirs,
jewelry, accessory, cosmetics, daily products, as well as unique
memorabilia from various countries donated by Korean Air employees. All the proceeds from the bazaar were donated to support
the education of youth suffering from malnutrition and orphans in
the Gangseo-gu region of Seoul.
2007 SUSTAINABILITY REPORT
SOCIAL CONTRIBUTIONS
32
● One Company-One Village Sisterhood Relationship
In July 2006, The Social Volunteer Group visited Myeongdong-ri, in
Gangwon-do, a village under sisterhood relationship with Korean
Air, to supply aid and medical services during a busy working period. Korean Air employees and medical staff from Inha University
Hospital conducted volunteering activities such as weeding rice
fields, repairing the village facilities, and medical examinations for
the elderly. 10 bicycles were also donated.
● Habitat for Humanity
50 Korean Air employees and their families participated in the
Habitat for Humanity event held in Chuncheon from July 31 to
August 4. They built and donated two houses. Since the launch of
corporate partnership with Habitat Korea in 2001, employees have
volunteered to participate in the building process. The airline has
enabled the construction of five houses, with an annual financial
support amounting to 400million won.
● Pink Ribbon Campaign
Korean Air holds a breast cancer prevention campaign every
October, the month designated to raise awareness on the issue. As
part of the campaign, female cabin crew and airport staff wear
Pink Ribbon on their uniform and distribute breast cancer selfevaluation cards to passengers. The Pink Ribbon, representing a
woman's healthy breast, is a symbol of the global campaign for
breast cancer prevention. Committed to caring for the better
health of women, Korean Air organizes various programs. One
such program involved a special education session on breast cancer by an expert who had overcome the disease.
Education
● Jeongseok University
To promote lifelong learning, cooperative labor-management relations, and talented workforce management, Korean Air established Jeongseok University (former Hanjin Industrial University)
within the company in 1988, the first in the Korean corporate world.
In 2007, under its financial support for school operation and tuitions, 2,896 graduates from the university have gone on to become
employees of Korean Air. In line with a growing demand for higher
education, the university is working hard to provide quality education by, for example, adding an industrial engineering bachelor
curriculum and providing a total of three bachelor programs.
● Jeongseok Graduate School of Logistics
On September 6, 2006, Korean Air established Jeongseok
Graduate School of Logistics at Inha University. Designated as
Korea's first specialized institution for logistics by the Ministry of
Construction and Transportation, Jeongseok Graduate School,
with the best faculty members and facilities in Korea, will nurture
talented human resources which will lead the way in the innovation
of corporate logistics and Korea's development into a logistics
powerhouse.
Sports Sponsorship
As an official sponsor of global sports events such as the World
Cup, the Olympics, and the Asian Games, Korean Air is promoting
the growth of global sports events. The airline also works towards
development in the domestic sports arena by supporting its professional volleyball and female ping-pong teams, and by both
sponsoring and organizing diverse sports events.
Korean Air's female ping-pong team, established in 1973, won
medals at the 2000 Sydney Olympics and the 2004 Athens
Olympics, while the professional volleyball team Jumbos,
launched in 1969, is delivering sophisticated and exciting play as a
leader in Korean volleyball.
Korean Air's investment in sport also covers less popular fields
and disabled players, as is reflected in its official sponsorship of
the Handball Championship in 2005, the KAL Cup Ping-Pong
Competition in 2006, and its support for the autistic swimmer, Kim
Jin-ho, of the Korean national team.
SOCIAL CONTRIBUTIONS
2007 SUSTAINABILITY REPORT
33
Global Volunteer Activities
● The 3rd Tree-Planting Volunteering in Mongolia
In line with chairman Cho Yang Ho's commitment to inspiring new
recruits with a dream to be a global player in the airline industry,
and taking the initiative to prevent yellow dust and desertification
spreading throughout Mongolia, Korean Air has organized employees to volunteer for tree-planting in Mongolia since 2004.
From May 4 to 12 in 2006, 100 new employees planted 4,000 poplar
trees in approximately a 12.6-acre area in Baganuur, 130km
southeast of Mongolia's capital, Ulanbaatar. The reforestation effort has created Korean Air Forest comprising 4,000 trees planted
in 2006, and 6,000 trees in 2004 and 2005. Thanks to a prolonged
effort to care for these young and vulnerable trees, such as the appointment of standing local managers for regular watering, 90
percent of the trees have survived and are growing well.
● Volunteering in Malaysia
30 members of the Yeonhap Sinu group, under the company's
Social Volunteer Group, were engaged in volunteer activities in six
outback villages in Perak, Malaysia, from October 23 to 28, 2006.
Most villagers are isolated from the civilized world, and survive in
the wild through hunting and collecting of wild plants. After studying and practicing electro acupuncture for a month, the Sinu group
members offered the therapy to the villagers who have little access to hospitals. In addition, haircuts and programs for children
such as puppet shows, games, activities, songs, and dances were
particularly welcomed.
Environmental Value
& Responsibilities
Development in balance with the environment is a task of great significance that affects not only the
survival of companies, but also the prospects of the human race. Korean Air focuses much effort on
protecting the earth's environment in cooperation with the global airline industry. Korean Air will
work towards sustaining an abundant and prosperous world where aviation and the environment
remain in harmony by executing a committed environment-oriented management as well as
introducing advanced aircraft which reduce fuel consumption and noise emission levels. To insure
the inheritance of a green and healthy earth, Korean Air will make every effort.
Major Environmental Management Performances in 2006
(Compared with 2005)
81.6%
2006
A Decrease in Fuel / 104,894㎘
A Decrease in CO2 / 263,712 tons
2005
A Decrease in Fuel / 57,766㎘
A Decrease in CO2 / 145,228 tons
-6.4%
Waste / 18,268 tons
-13.5%
Noise Charges / KRW3.1 billion
-19.6%
Used Water / 1,532,562 tons
Environmental Value & Responsibilities
SUSTAINABLE ENVIRONMENT
2007 SUSTAINABILITY REPORT
SUSTAINABLE ENVIRONMENT
36
Korean Air pursues environmentally
friendly management practices for a
greener future and sustainable
growth.
The airline industry has long been playing
an indispensable role in globalization by
promoting the exchange of not only people and resources, but also culture and
knowledge. On the other hand, however,
Korean Air also understands that environmental pressures are increasing with
the rapid growth of aviation, and we are
fully committed to operating in an environmentally res-ponsible manner while
meeting rising demand for air travel.
Environmental Vision
Under the vision of "Improving the Value of Life through the Harmonization of Aviation and the
Environment," Korean Air seeks to fulfill its corporate responsibility of preserving the environment by reducing the environmental footprint of its operations. Indeed, we are actively involved
in worldwide endeavors to make flying environmentally friendly by adopting environmental
management practices and setting mid-to-long-term environmental goals. We plan to do this
while meeting the ever rising demand for air travel without compromising safety. Korean Air
will continue to take a proactive approach to realize environmentally and economically sustainable growth for a brighter future.
Vision
To be a Respected Leader in the World Airline
Community
Environmental Vision
Mission
Improving the Value of Life
through the Harmonization of
Aviation and the Environment
EXCELLENCE IN FLIGHT
Transparent
Management
Business Activity
Environmental Policy
Accountable
Management
Stakeholders
Implementing
Environmental Goals
Minimizing
Environmental Impact
Shareholders
Employees
Labor Union
Customers
Alliance
Business
Partners
Suppliers
Communities
Government
NGO
Environmental
Impact
Aircraft
Operation
Cabin Service
Ground
Activities
Ethical
Management
Coexistent
Management
Social
Contributions
Business Goals
Fulfilling Environmental
Responsibilities
Fulfilling Economic
Responsibilities
Fulfilling Social
Responsibilities
Sustainable Growth
37
Sustainable Future
The aviation industry is actively developing bio-fuel technologies in an attempt to mitigate impact on the environment. A case in point is the R&D program that was introduced with the target
of cutting fuel consumption and noise by more than 50% and NOX emission by more than 80%.
Also, airlines strive to effectively control air traffic and streamline service procedures to make
flying more efficient and to limit gas emissions.
Fuel Efficiency
Aircraft Noise
Aircraft today are 20%
more fuel-efficient than
those designed a decade
ago, consuming a mere 3.5
liters of fuel per 100 passenger-km. Korean Air
will adopt more fuel-efficient aircraft, namely, the
A380 and the B787 which
use even less than 3 liters
per 100 passenger-km.
The aviation industry's
continued R&D investment helped it curtail
landing and takeoff noise
levels by more than 50%
over the last decade.
2008
2011
( B787 TO BE INTRODUCED )
(A380 TO BE INTRODUCED)
2006
Fuel Consumption
Fuel Consumption (Car vs. Airplane)
6
100%
5.3ℓ
5
80%
achieved
-50%
60%
4
3.5ℓ
3
goal
-50%
40%
2
20%
0%
2020
1
0
1960
2000
2020
Airplanes now use 50% less fuel than 40 years ago. It is
expected that fuel usage will be further reduced
another 50% by the year 2020.
Gas Emission
Average fuel consumption (100 passenger-km)
Aircraft Noise
dB
100%
100%
30
20
80%
10
Chapter2
0
60%
-10
-20
40%
-30
27%
20%
20%
14%
12%
1970
1980
1990
CO emission (based on LTO Cycle of ICAO)
HC emission (based on LTO Cycle of ICAO)
Chapter4
-40
14%
-50
3%
0%
Chapter3
2000
-60
1960 1970 1980 1990 2000 2010 year of certification
Aircraft noise level has dropped by more than 30dB over
the last four decades. (based on the ICAO Noise
Standard)
SUSTAINABLE ENVIRONMENT
Aircraft manufacturers have long sought to develop green aircraft and their efforts are bearing
fruit. Korean Air seeks to invest in environmentally friendly aircraft and improve flight operations procedures. In reducing oil consumption, fuel emission and noise, Korean Air will achieve
both economic and environmental goals.
2007 SUSTAINABILITY REPORT
Korean Air understands that it must
balance the rising air travel demand
with a consideration of the impact of its
operations on society and the environment. Korean Air's goal is to secure social, economic and environ-mental
sustainability while remaining interdependent and balanced in its approach to the environment.
Environmental Value & Responsibilities
ENVIRONMENTAL IMPACT
2007 SUSTAINABILITY REPORT
ENVIRONMENTAL IMPACT
38
We strive to minimize impact on the
environment by reducing both gas
emission and aircraft noise.
With the aim of achieving both environmental and economic goals, the airline industry
has made a continued effort to expand its
investment in energy-efficient aircraft and
improve on operational procedures.
Korean Air actively takes part in such effort
by continuing to purchase the latest airplanes, which consume less fuel and generate less emission and noise and by dramatically improving operational procedures.
Environmental Impact of Flying
All operations of an airline, including flights, cabin services, aircraft maintenance and ground
maintenance and support activities, have an impact on the environment. The most significant
impact is flight itself in which aircraft consume fossil fuel and emit carbon dioxide. Also, noise
from departure and landing may significantly affects neighborhoods adjacent to the airport.
With the demand for international air travel increasing about 4% each year, as we are witnessing today, replacing current jet fuel with environmentally friendly fuel appears to be the most
ideal way of solving environmental problems. However, given the significant amount of time
required for achieving viable commercial application of green fuel, the most effective and immediate response, in minimizing environmental impact, is to introduce the latest aircraft
which consume less fuel and generate less noise during departure and landing.
Korean Air seeks to not only retire old aircraft, and introduce new and more efficient ones, but
also seeks to make its operational procedures more efficient. Korean Air looks to invest further in environmentally friendly technologies with an eye toward green future for our next generation.
IN
Jet Fuel/ Engine Oil/ Hydraulic
Fluid / Halon/ HFC
Food, Beverages/ Expendables
Packing Paper/ Newspapers,
Magazines/ In-Flight Sales
Items
Energy/ Water/ Fuel/Chemicals/
Halon, Freon, De-icing Fluid/
Batteries/ Paper/ Vehicles/
Equipment
Energy/ Water/ Paper/ Halon,
Freon/ OA Equipment
OUT
Takeoffs,
Landings and
Flights
Emissions (CO2, NOx, SOx, HC,
etc), Noise, Fuel Emissions,
HFC, Halon
Cabin Services
Global Warming
Wastes
Wastewater
Ground
Maintenance
and Support
Activities
Offices
Environmental
Impact
Ozone Layer
Depletion
Noise Pollution
Wastes/ Wastewater/ Hazardous
Chemical Materials / Emissions
(CO2, NOx, SOx, HC, etc)/
Chemicals (VOCs, etc)/ Noise
Wastes
Wastewater
Air Pollution
Wastewater
Wastes
Environmental Value & Responsibilities
ENVIRONMENTAL MANAGEMENT SYSTEM
ENVIRONMENTAL MANAGEMENT SYSTEM
2007 SUSTAINABILITY REPORT
39
Korean Air seeks to fulfill its corporate
responsibilities through environmental
management practices.
Committed to upholding its corporate responsibilities, and in accordance with its vision, Korean Air has adopted a number of
environmental policies and management
practices. Setting environment goals, developing action plans, and taking environment audits on a regular basis are only a
few examples of our endeavor to remain
committed to a greener environment. Korean
Air will continue to seek ways to fully instill
environmental awareness and adopt the
best practices throughout the company.
Green Management Practices
In receiving the ISO14001 certification, the international standard for environment management systems, Korean Air has introduced a corporate-wide environment management system
consisting of five sectors; the Headquarters & General Division, the Aerospace Division, the
Maintenance & Engineering Division, the Catering Centre and the Jeju & Seogwipo KAL Hotel
Division. We also aim to prevent potential damage to the environment through the PDCA Cycle
and environmentally friendly processes and procedures which ensure the use of green resources, recycle wastes, and adhere to relevant environmental laws and regulations.
Korean Air's PDCA Cycle
External Influences/ Policies
Regulations/Communities
Customers/Airports, etc.
Review by Management
Environmental Policies
Environmental Goals
・Assessment of Environmental Impact
・Catching regulations and other requirements
・Establishment of Environmental Goals and
Guidelines
・Securing the
PLAN
appropriateness,
・Implementation of
adequacy and
Objective Programs
effectiveness of
・Distribution of
the EMS
・Evaluation of
ACT
DO Resources &
Education/Training
Opportunities for
・Communications
Continued
・Documentation
Improvements
・Publication of
CHECK
Environmental
Reports
・Monitoring & Assessment
・Compliance Evaluation
・External/Internal Environmental Audits
・Correcting & Preventing Incongruence
Environmental Activities in 2006
Over the mid-to-long term, Korean Air seeks to fully embed green management practices
across the Company. In line with our effort, we will adopt environmental policies and procedures in such areas as cabin service and ground support activities. Notably, in 2007, we will reinforce our communication on environment issues, by introducing cyber training to heighten
staff awareness, and enhance the quality of our Sustainability Report.
2006 Environmental Management Activities
40
Mid- to Long-term Goal
2006 Achievements
Status
2007 SUSTAINABILITY REPORT
ENVIRONMENTAL MANAGEMENT SYSTEM
Reducing GHG* and Improving Air Quality
64 projects to save jet fuel
Saved 105,000㎘ of fuel, reduced emissions by 264,000 ton
Increased fuel efficiency per RTK
0.26312ℓ/ATK (Improved by 0.8% from 2005)
completed
completed
Fleet renewal
Introduced one B777-200, one B737-B800, two B747-400ERF
completed
Retired old fleet
retired one B747-300 cargo plane and two B727-200 cargo planes
completed
Ground energy savings
Electronic consumption increased 5.9%, fuel 2.3% while RTK up 8%
completed
Greenhouse gas management
Developed web program to monitor emissions of
completed
gas exhaust by pollutant source
Noise Abatement
Retiring CHAP 3 Fleet
Retired one B747-300 cargo plane and two B747-200 cargo planes
completed
Noise standard implemented
26 departures and landings, out of 54,219 in Gimpo Airport, went
completed
over the standard noise level, as compared to 34 cases in 2005
Environmental Management
Implemented detailed goals
Achieved 43 out of 58 goals set
in progress
Environment audits
Found 36 faults requiring correction or prevention
in progress
Laws and regulation violation
Stakeholders' environmental check on 33 items (no issue found)
completed
Environmental education
2,251 trainees for 375 hours in total
completed
(Corrective action taken in 26 faults)
Waste Management
Reduced wastes
18,268 ton generated, down by 700 ton from 2005
completed
Increased recycle rate
Recycled 6,661 ton, up 0.2% from 2005)
completed
Developed Chemical Management System
completed
Hazardous Chemical Materials
Development of Computerized System
Environmental Communications
Delivery of Integrated Information
Published Sustainability Report
Environmental education
Online Environmental Education System setup
completed
in progress
Social & Environmental Contribution
Contribution to the international
Trees planted to prevent desertification in Mongolia (4,000 trees)
completed
community regarding the environment
Environmental Goals and Audits in 2006
* Green House Gas
Korean Air conducted company-wide environmental impact evaluations in 2006 and found a
total of 58 important environmental impacts. In response, Korean Air set forth detailed goals
for individual departments and achieved 43 goals. These goals were designed to address climate change, expand recycling for reducing wastes, replace hazardous materials with environmentally-friendly ones, control gas emission and expand community service etc.
Meanwhile, the Environmental Audit in 2006 identified 36 items as requiring correction, of
which 26 were rectified while the rest are in progress.
Management of Environmental Contingency
Korean Air has put in place contingency plans, including emergency procedures, in airports
across the country. While it places the protection of human life before anything else, by preparing for various emergency situations through an annual drill, the plan also ensures to minimize
the detrimental impact of hazardous materials on the environment, by making resources and
tools readily available.
Environmental Expense
12000
(Unit: in millions of KRW)
11,287
11000
10,196
9,704
10000
9,289
9,363
8,966
9000
8,471
8000
2000
2001
2002
2003
Environmental Expenses
Responsive activities (4,718)
Preventive Activities (1,296)
Stakeholder Activities (57)
2004
2005
2006
Activities in response to Laws (3,633)
Environmental Value & Responsibilities
CLIMATE CHANGE
CLIMATE CHANGE
2007 SUSTAINABILITY REPORT
41
Korean Air actively seeks to reduce
greenhouse gas to deal with climate
change.
In response to climate change and the
Kyoto Protocol that went into effect in
Feb, 2005, companies around the world
are committing their effort to mitigating
the environmental impact of their operations, and Korean Air is no exception. In
order to curb global warming, Korean Air
is making a multi-faceted effort including
modernizing aircraft, expanding transportation network, raising load factors,
improving maintenance and flight operations, and curtailing load weight.
● Aviation and Climate Change
Unlike the problem of aircraft noise, which remains a concern for communities in close proximity to airports, greenhouse gas from fuel emission is perceived as a worldwide issue, captivating the attention of all stakeholders throughout the world.
Though passenger travel and cargo transportation by air has dramatically increased [by 5.5%
and 7.9% respectively 1992 and 2000] recent scientific research on aviation and climate change
has shown that CO2 emissions from aircraft accounts for a mere 2.2% of the total amount of
man-made CO2 emissions. Although aviation's overall contribution to carbon dioxide emissions remains a small percentage, relative to the rapid growth of air transport, the airline industry worldwide takes climate change seriously and is committed to finding effective measures in limiting aviation's impact on climate change.
● Kyoto Protocol and Air Transport
Though the Kyoto Protocol obliges domestic airlines to decrease the amount of greenhouse
gas emissions, it does not include the gas emissions of international airlines due to the special characteristics of these flights. The ICAO is currently seeking to establish global guidelines, in regard to global warming gases, in the aviation sector, targeting the year of 2007 for
the release of new standards. Although the ICAO is in the process of reviewing an emissions
trading system to reduce aircraft emissions, a number of technological problems remain to
be solved.
Aviation Industry's Response to Climate Change
Technological advance
・Developing green
aircraft and engines
・Introducing alternative
energy
Airport / Infrastructure
Upgrade
・Shortening flight
distance by optimizing
routes and traffic
・Minimizing taxi and
waiting time at gate by
optimizing airport design
Operational Improvement
Financial Incentive
・Adopting fuel-efficient
aircraft
・Optimizing flight route
and speed
・Making ground
operations
environmentally
friendly
・Emissions Trading
Scheme
Aviation Industry's Response to Climate Change
● EU to Include Aviation in Emission Trading Scheme
42
2007 SUSTAINABILITY REPORT
CLIMATE CHANGE
On Dec 20, 2006, the European Commission presented the Emission Trading Bill to the EU
Parliament, a scheme which requires non-EU airlines flying in and out of Europe to buy permits in order to cover both emissions on their European routes and trade emissions with other
airlines. However, it is important to note that a greenhouse gas policy should be based on
broader international agreement. Single-handed enforcement of a regional policy, without the
support of international stakeholders, will only distort competition and discourage airlines in
their effort to expand their investment in the environment.
● IATA's Stance on Climate Change
・ Technological advance of aircraft is the most effective way to mitigate greenhouse gas.
・ Enhancement of flight routes and infrastructure including airports should be the first step
towards higher fuel efficiency.
・ Imposing taxes on emission will only add financial burden to airlines, discouraging them
from investing in new aircraft.
・ IATA opposes the EU's Emission Trading Scheme, which has been drafted without
international consensus, and instead supports the global policy action on greenhouse gas
driven by ICAO.
● Reducing Fuel Consumption
Korean Air has long sought to decrease fuel use by modernizing aircraft, expanding transportation networks, raising load factors, improving maintenance and flight procedures, and
curtailing the weight of loads. Although these efforts have resulted in reduced fuel consumption and gas emissions, a rapidly increasing demand for air travel creates a further challenge
for the airline industry to immediately slash fuel consumption and gas emissions, mainly
through technological and operational improvement. A long-term effort is required to successfully bring current technologies to a higher level while at the same time securing security
and safety. The amount of CO2 emissions by Korean Air's domestic operations amounts to 0.2%
of Korea's total CO2 emissions and 1% of the total in the transportation sector. If we include
emissions by Korean Air's international operations, which are currently excluded from the
Kyoto Protocol, the Company emits around 2% of Korea's total CO2 emissions.
(Data Reference: 2005 Greenhouse Gas Inventory Policy Report / Korea Energy Economics Institute.)
● Reduction of Aircraft CO2 Emissions Ratio (kg-CO2/100RTK)
Despite increasing demand for air travel, Korean Air has been successfully reducing pollutants
by improving fuel-efficiency. Indeed, much data shows that environmental pollution does not
grow in direct proportion to the increase in transport volume. For example, while RTK* has increased 59% since 2000, Korean Air's fuel consumption went up by a mere 38% over the same
period. This signifies that 21% growth was achieved without environmental impact. Driven by
the Company's efforts to raise fuel efficiency and load factors, the unit price growth rate (kgCO2/100RTK**), was instead reduced by 14%.
* RTK : Revenue Ton Kilometer
** 100RTK(100 Revenue ton kilometer) :
Transport of one ton load of revenue volume
100km (see Glossary)
CO2 Emission Ratio Changes (kg- CO2/100RTK)
(Unit: %)
GHG Emission by Korean Air in 2006
(Unit: ton)
CO2
11,201,027
70%
CH4
42
50%
N2O
361
40%
NOx
60,443
CO
20,393
10%
8,235
0%
3,470
-10%
NMVOC
SO2
30%
Greenhouse Gas Protocol
20.69
0
2000
-3.82
-4.41
9.87
-8.06
2001
-8.96
2002
46.67
47.60
28.43
31.67
-12.44
-9.85
2004
2005
25.57
20%
-20%
Calculation Formula: IPCC 2006 Guideline, WRI/WBCSD
59.34
60%
38.45
16.37
100RTK growth rate
-7.33
2003
Fuel consumption growth rate
-13.64
2006
(kg-CO2/100RTK)
Environmental Value & Responsibilities
AIRCRAFT FUEL MANAGEMENT
AIRCRAFT FUEL MANAGEMENT
2007 SUSTAINABILITY REPORT
43
Korean Air endeavors to save resources and prevent pollution by improving fuel efficiency.
Development of new engine technologies
and improvement of fuselage mechanics
have allowed airlines not only to enhance
their fuel efficiency by more than 70%
since the 1970s, but have also significantly reduced CO2 emission, which is a
major culprit of climate change.
Improvement of fuel efficiency has truly
made flying a more environmentally
friendly means of transportation. As
global leading carrier, Korean Air will
continue to effectively manage fuel performance and set global standards in
partnership with major airlines.
● Fuel Conservation Efforts
Faced with record-high oil prices in 2006, Korean Air took proactive measures for fuel savings
across all sectors, including flight operations, maintenance, general controls, passengers,
cargos and in-flight meals.
Aiming at identifying every single opportunity to make fuel consumption more efficient, Korean
Air has conducted a series of fuel savings projects across areas such as flight procedures,
planning, and aircraft weight. We have fully utilized FTS (Fuel Tracking System), our own integrated database for effective fuel management, and incorporated global practices, including 6
Sigma and ICAO/IATA recommendations, in our initiatives to conserve fuel.
Meanwhile, outputs of the fuel-saving tasks are reflected in our day-to-day operations in the
form of company-wide policies and procedures. With continual feedback, we also seek to keep
track of the performance of fuel management at each site, which enables us to establish the
most realistic and effective solutions to fuel savings.
Korean Air's commitment to fuel conservation has led to remarkable results. A total of 64
tasks, conducted throughout 2006, achieved fuel savings of 105,000 kiloliter, which amounts to
KRW 60.3 billion, while fuel efficiency increased 3.0% for passenger flight and 2.5% for freight
airplane.
Measures to Reduce Fuel Consumption
2010 Fuel Consumption Management Goal
0.262
0.260
(Unit: Liter/ ATK*)
0.26119
Decrease flight times by using more
economic routes
Improve airplane and engine
performance
・Load the optimal amount of legal fuel
by applying the Legal Contingency
Fuel 5% Rule
・Utilize alternative airports and shorter
routes
・Determine optimal flying altitudes in
consideration of loads, meteorological data
・Remodel engines on long-distance
aircraft to improve performance
・Conduct regular washing of engines
with water
Planning
Performance
0.258
0.25817
0.256
Reduce loads to decrease fuel
consumption
0.254
0.25438
0.252
0.250
2006
2007
*ATK: Available ton kilometer(see Glossary)
2010
・Load amount of in-flight potable water
suited to reservation rates, flight times
・Change systems to share spare parts
with other airlines at overseas airports.
Weight
Operations
Maintain optimal speeds and conditions
for flights
・Require 4-engine aircraft to use only
3 while taxing
・Optimize the center of gravity of
aircraft to improve efficiency
・Tailor fuel requirements to passenger
reserve rates and load factors
2007 SUSTAINABILITY REPORT
AIRCRAFT FUEL MANAGEMENT
44
Fuel Savings & CO2 Reductions Achievements
Year
New Projects (Case)
Total (Case)
Fuel Savings (Achieved)
2004
23
23
9,842㎘
CO2 Reductions (Achieved)
24,744 tons
2005
27
50
57,766㎘
145,228 tons
2006
16
64
104,894㎘
263,712 tons
● North Pole Route
Airlines started flying over the North Pole in 2001 for the Americas-Asia routes in 2001. The
trans-polar air route allows airlines to fly shorter distances while consuming less fuel. For example, for the Eastern US - Incheon route, compared with the existing Kamchatka Route,
300km in flight distance is reduced, and thus 30 minutes in flight, is saved. This not only enables passengers to enjoy a more comfortable flight but also contributes to the national economy given record breaking oil prices.
● Legal Contingency Fuel Requirement: 5% Rule
Korean Air has put in place a flexible fuel loading policy in which various factors, such as
routes, aircraft type and the seasonal pattern of fuel consumption, are taken into account. In
line with this policy, we obtained approval from the Ministry of Construction and Transportation
to reduce the legal contingency fuel requirement from 10% to 5%, amounting to a reduction of
40,000 tons in the annual fuel load. This achievement highlights not only our dedication but our
capability in reducing fuel consumption through constant monitoring and performance management.
● One Engine-out Taxi-in Process
Taxi-in, with one engine out, is a fuel-saving practice in which aircraft taxi in with one engine off
after landing. It was first introduced for B747-400 in June 2004, as part of our operational efforts to enhance fuel savings. Over the past two years, it has been carefully monitored and assessed, with now more than 90% of Korean Air's B747s taxing in with one engine off. Other aircraft models such as B777, A330 and B737 followed suit from November 2006.
Fuel Efficiency Improvements in 2006 (Passengers)
0.04150
0.04100
(Unit: Liter/ATK)
0.04111
0.04073
0.04084
0.04077
0.04088
0.04073
0.04092
0.04088
0.04077
0.04088
0.04047
0.04050
0.04043
0.04000
0.03950
0.04016
0.03960
0.04016
0.04016
0.04035
0.04035
0.0439
0.04020
0.03986
0.03975
0.03988
0.03967
0.03900
0.03850
Jan.
Feb.
Mar.
Apr.
May
Jun.
Jul.
Aug.
Sep.
Oct.
Nov.
2005
Dec.
2006
Fuel Efficiency Improvements in 2006 (Cargo)
(Unit: Liter/AFTK*)
0.1800
0.17697
0.17659
0.17466
0.17542
0.1750
0.1700
0.17515
0.17190
0.17125
0.17341
0.17421
0.17163
0.17125
0.1650
0.16970
0.17754
0.17640
0.16830
0.16788
0.16588
0.17496
0.17481
0.16209
0.16232
0.16297
Oct.
Nov.
0.17159
0.16523
0.1600
0.1550
0.1500
Jan.
Feb.
Mar.
Apr.
May
Jun.
Jul.
Aug.
Sep.
2005
*AFTK: Available freight ton kilometer (see Glossary)
Dec.
2006
Environmental Value & Responsibilities
AIRCRAFT MODERNIZATION
AIRCRAFT MODERNIZATION
2007 SUSTAINABILITY REPORT
45
Korean Air continually adds new aircraft
to its fleet to reduce emission and noise.
Recognizing that fleet modernization can
most effectively mitigate both aircraft
emission and noise, Korean Air is replacing
its B747s, its previous long-haul aircraft,
with the latest B777. In line with Company
policies on modernization and unitization,
the A300-600 models, mid-to-long haul
aircraft, are being replaced with A330
models. These new aircraft have dramatically improved fuel efficiency by 17% on
comparison with older models.
Replacing Old Aircraft with New Models
(Unit: No. of units)
120
119
119
117
100
80
117
121
116
77
68
60
74
69
66
59
59
40
51
51
47
42
47
20
0
2001
2002
2003
No. of Aircraft
2004
Old Models
2005
2006
New Models
Aircraft Age
● Environmentally-Friendly Next Generation Aircraft
Korean Air will acquire 10 B787s to be launched commercially from 2009 to 2011. These airplanes use carbon-fiber plastic, a composite material that is lighter than any other traditional
aircraft materials such as aluminum alloy. Lighter construction enables the aircraft, despite
its medium size, to transit the Pacific Ocean. With commercial service launch planned from
2010 to 2011, we will also introduce 5 A380s to use on long-haul routes. The super-jumbo size
A380 features double decks with a standard capacity of 555 passengers and a maximum capacity of as many as 840 passengers. While it can carry 35% more passengers than existing
airplanes, it generates 30% less noise with a mere 2.9 liter of fuel per 100 passenger-km. The
new aircraft will give us the ability to pursue our goal of operating as an environmentally
friendly global carrier.
● Environmental Review
In order to comply with the global environmental regulations, which are becoming increasingly
stringent, Korean Air is making a continued effort to reduce noise and emissions to a minimum
level, limiting our impact on the environmental. In particular, we select engines that meet or
exceed the international environmental standards while securing warranties in our contracts
with manufacturer to guarantee a specified or greater level of maintenance.
( GE90-115B Engine (Dual Annular Combustor) )
The B777-300 model, which Korean Air is introducing from 2009, will be powered by
General Electronics' GE90-115B engine. This next-generation engine for the mid-to-large
sized aircraft will help us reduce emissions as its combustion chamber, equipped with a
dual fuel nozzle, allows for the complete combustion of both fuel and gas. With this advanced technology incorporated, the engine is capable of optimizing its combustion regime,
including temperature and combustion time, to enable conditions where gases, such as
CO, HC and NOX, major contributors to air pollution, generate the lowest level of emission.
GE90-115B Engine - Dual Annular Combustor
(Unit: Year)
16
12
100%
10.9
10.7
Cruise
9.5
8.5
8
4
0
Emission level of GE90-115B Engine, compared against ICAO CAEP4 Standard
6.7
6.2
6.0
6.0
6.0
6.6
2000
2001
2002
2003
2004
7.3
8.2
(Low CO, UHC)
78.6%
80%
60%
45.3%
34.7%
40%
Take-off
6.2
5.7
2005
2006
(Low NOX)
22.7%
20%
0%
Average Age of Aircraft of IATA
members: 11.7 Years
Cargo
Passenger
HC
CO
NOX
Smoke
Environmental Value & Responsibilities
NOISE
2007 SUSTAINABILITY REPORT
NOISE
46
Korean Air has consistently reduced
aircraft noise by introducing quieter
aircraft and abiding by operational procedures
Thanks to advances in technology, there
has been a significant reduction in aircraft noise during takeoffs and landing.
Nevertheless, with communities surrounding airports, and residents desiring
a higher quality of life, com-plaints concerning aircraft noise have yet to be alleviated. In response, Korean Air strives to
minimize aircraft noise by both introducing quieter and more advanced aircraft,
and complying with operational procedures.
● Reducing Noise at Source
Technological progress─silent engine development, progress in aerodynamics, and reinforced operational procedures─has dramatically curtailed aircraft noise in comparison to the
aircraft of the 1960s. Statistics suggest that the latest aircraft are quieter by more than 20dB
than their predecessors, reducing human fatigue from noise by more than 75 %.
Since the ICAO started regulating the noise emissions of civilian aircraft in 1969, it has continuously reinforced these regulations. Currently, all the civilian aircraft are required to meet the
standards of Chapter 3. Aircraft introduced after January 2006, however, need to conform to
the Chapter 4 standards that stipulate a 10dB cumulative reduction from the levels of Chapter
3. All the 121 aircraft that Korean Air proudly operates fulfill the Chapter 4 requirements since
two B747-200 cargo aircraft and one B747-300 cargo aircraft, subject to Chapter 3, were retired in 2006.
Compliance with Chapter 4 Standards of Korean Air Airplanes (ICAO ANNEX 16)
[As at Dec. 31, 2006]
*
E
P
N
d
B
0.0
-5.0
Chapter 3
-10.0
-15.0
Chapter 4
B747-400ERF
B777-300
B777-200
B737-800
B737-900
A330-200
30
Chapter2
Cumulative Margin Relative to
Chapter 3 (EPNdB)
20
10
26
11
8
4
12
15
16
3
16
A300-600R
B747-400F
No. of units
ICAO Noise Reduction Policies
A330-300
Model
B747-400
-20.0
10
Total 121
Chapter3
0
Chapter4
-10
*EPNdB (Effective Perceived Noise Decibels): Refer to glossary
-20
*ICAO CHAPTER 4 Standards: Cumulative noise levels measured at three given points on the runway
shall be 10dB lower than the Chapter 3 Standards.
-30
-40
-50
-60
1960
1970
1980
1990
2000
2010
47
Noise Footprint
588m
430m
NOISE
2007 SUSTAINABILITY REPORT
282m
B787
4,905m
B777200ER
B747400
5,726m
8,783m
A noise footprint indicates the geographical area affected by aircraft noise during takeoffs and landing. The evolution of both engine design and the study of aerodynamics has
reduced the noise footprint considerably.
● Noise Abatement Procedures
Korean Air endeavors to mitigate aircraft noise by improving operational procedures. Noise
abatement procedures are applied in accordance with both aircraft performance and conditions around airports. Given that residential communities are located in close proximity of the
airports, the Noise Abatement Departure Procedure 1(NADP1) is practiced during takeoffs and
landings at domestic airports.
In following the procedure, pilots climb rapidly to an altitude of between 200-450 meters, and
reduce the engine thrust. Then at around 900 meters high, pilots begin flap retraction and acceleration in order to enable a swift exit from noise sensitive areas.
For takeoffs made at airports far from communities, or towards the sea, NADP2 is applied.
NADP2 requires a regulated takeoff thrust to an altitude of 200-300 meters, followed by flap
retraction and acceleration up to 900 meters. Pilots are directed to rise slowly in a low degree
climb. Full thrust is then applied for climbing to cruising altitude. The regulated thrust levels
are varied depending on the weight of aircraft.
・Climb thrust
・Accelerate to Flaps Up speed and
retract flaps/slats
・Thrust reduction
900m
450m
300m
NADP1
NADP2
・Climb thrust
・Take off thrust
・Thrust reduction
・Retract flaps/slats
*Flap: The flap is a high lift device usually located along the leading and trailing edges of both the left and right
wings of an aircraft.
Winglets on the B737-800 fleet reduce the noise footprint by
more than 6.5%.
48
● Joint Efforts for Noise Mitigation
Noise abatement at airports will take more than the effort of Korean Air alone. Alongside
Korean Air's effort to introduce noise reduced airplanes, stakeholders could come up with
proper zoning and management plans and preventive measures against reckless urbanization
which may encroach on the vicinity of airports.
2007 SUSTAINABILITY REPORT
NOISE
( Noise Charge )
Airports located in cities impose a noise charge to aircraft with an aim of controlling noise pollution. Charges vary depending on the types of aircraft. In some cases, airplanes with excessive
noise are not permitted to land.
4000
3,960
3,884
(Unit: In millions of KRW)
3,580
3,495
3,097
1,727
2,087
1,568
1,862
1,328
2000
1,927
0
2002
2,157
1,873
2003
2004
1,718
1,769
2005
2006
Domestic
International
( Korean Air B777 Fleet Wins 'Fly Quiet Award')
On May 3, 2006, Korean Air's B777 fleet was presented with the "2005 Fly Quiet Awards" at the
YVR Chief Pilot's Meeting in Vancouver, Canada. The award is given to airlines with the lowest
average annual sound exposure, as measured by the airport noise monitoring and flight tracking system. The B777 fleet of Korean Air won the award in the category of wide body jets.
Flights Exceeding Standards during Takeoffs and Landings at Gimpo Airport
2005
Operated Flights
Flights Exceeding Limits
Ratios
62,849
2006
54,219
34
0.05%
26
0.05%
At Gimpo Airport, when noise exceeds 87dB-96dB, the offending airplane is classified into a high noise category. In 2006, 26 out of
54,219 flights were reported to violate the limits by an average of 1.6dB.
( Engine Test Noise )
Jet engines are subject to performance checks on the ground before being installed in an airplane. During tests, Korean Air operates an indoor engine test cell to contain noise. Outdoor
performance tests are conducted at run-up shelters* designed to decrease noise.
*Run-Up Shelter: An outdoor fence-type facility where engines are checked when being installed in an aircraft.
Environmental Value & Responsibilities
LOCAL AIR QUALITY
LOCAL AIR QUALITY
2007 SUSTAINABILITY REPORT
49
Korean Air is committed to the improvement of the quality of life in communities through prevention of air pollution.
Korean Air makes an all out effort to reduce the emission of engine exhaust that
can possibly affect the community air. It
has introduced aircraft with lower-polluting engines and curtailed gas emission
from ground support vehicles and equipment. Furthermore, all the operating areas are equipped with facilities for preventing air pollution ensuring a strict
control of all air pollutants.
● Emissions during LTO
A LTO (landing and takeoff) cycle refers to aircraft landing, movement, and takeoff under the
altitude of 900 meters in airport areas. During LTOs, an aircraft emits gases such as nitrogen
oxides (NOX), hydrocarbon (HC), and carbon monoxide (CO), which affect community air. Over
the past forty years, engine technology development has led to a substantial drop in the emission of CO by 50%, and HC by 90%. Aircraft manufacturers are working on R&D projects to
push down NOX emission by more than 80% by 2020.
Aircraft Landing and Takeoff (LTO) Cycle
Climb-out
Approach
2.2 minutes, 85% of regular output
4 minutes, 30% of regular output
Take-off
0.7 minutes, 100% of regular output
Taxiing
26 minutes, 7% of regular output
Source: ICAO (Regulations for approving engine efficiency of aircraft)
● ICAO Regulations
Aircraft engine emissions of NOx, HC and CO are controlled by stringent international standards, which are being reinforced with time. In particular, ICAO regulations on NOx emission
have been revised three times in the past 15 years. In 2004, the latest ICAO Committee on
Aviation Environment Protection (CAEP/6) decided to drop the NOx emission limit, for engines
approved after 2008, by more than 12%. As much as 58.7% of Korean Air aircraft already meet
the new NOx emission standard.
Korean Air's Fleet Conforming to ICAO NOx
100%
100%
100%
85.3%
85.3%
83.4%
56.4%
56.9%
2004
Satisfying CAEP2
● Ground Emission Reduction
58.7%
2005
Satisfying CAEP4
2006
Satisfying CAEP6
Pollutants are produced not only during aircraft takeoffs and landings, but also during parking,
engine tests, the use of auxiliary power units (APU), and the operation of flight support vehicles
and equipment. As APU consumes further fuel as well as producing more emissions, Korean
Air uses the Ground Power Service (GPS) for most ground activities. GPS can also mitigate
noise significantly when compared to APU. Particularly, at the Incheon International Airport,
Korean Air utilizes GPS for the electricity and cooling and heating system of boarding bridges
in order to lower both energy consumption and gas emissions.
However, to ensure an overall improvement of the air quality surrounding airports, further effort is required. To give a couple of suggested improvements, more energy-efficient vehicles
and facilities could be used, and airport authorities could shorten the distance to and from
parking stands.
50
2007 SUSTAINABILITY REPORT
LOCAL AIR QUALITY
Korean Air developed a web-based program in 2006 to check fuel consumption by all ground
support vehicles and equipment. Korean Air will be, as it has been, dedicated to further investing in clean energy vehicles and equipment, and further committed to reducing energy consumption for the betterment of both the air quality and the community.
Energy consumption and greenhouse gas emissions of maintenance and operation vehicles in 2006
Vehicle
Fuel
Maintenance support vehicle
Operation support vehicle
Greenhouse gas emission (tCO2e)
Consumption(㎘)
Diesel
1,343
Gasoline
41
Diesel
3,989
Gasoline
45
3,847
100
11,425
110
*tCO2e (equivalent): CH4 and N2O were converted to CO2-equivalent.
● Air pollutant control during maintenance
During aircraft maintenance, air pollutants can be generated and produced. A major part of
these contaminants are noxious gases such as nitrogen oxides (NOx), sulfur oxides (SOx),
Korean Air operates a total of 106 facilities for pollution prevention in all operating areas to
keep the emission of air pollutants under 50% of regulations.
Air Pollutants Emissions in 2006
(Unit: kg)
Contaminants
2005
2006
Change
Dusts
6,100
4,110
-32.6%
NOx
3,470
4,135
19.2%
SOx
1,282
1,077
-16.0%
Others
Total
418
606
45.0%
11,270
9,928
-11.9%
● Compliance with Environmental Regulations
Korean Air, an environmentally friendly business, fully abides by environmental regulations.
With 33 compliance checks conducted by government authorities in 2006, not a single failure
has been reported against Korean Air.
Use of GPU (Ground Power Unit) at Incheon Airport
Cargo Terminals
( Unit: No. of flights )
850
900
800
Korean Air Environmental Compliance Process
Environmental Regulations Registration (Web-based program)
757
700
600
500
・ Pollutant Discharge Monitoring
- Set-up of Internal Guidelines TMS
- TMS & Measuring Outsourcer
- Maintenance of Environmental
Database
400
300
200
180
・Internal Audit & Environmental
Facilities Check-up
- Detection of faults requiring
correction & preemptive
measures
・Environmentally-friendly
Corporation
・Implementation of Voluntary
Environmental Management
Accords with the Community
104
100
0
2005
Total Flights
2006
Flights Using Mobile GPU
GPU, which uses fossil fuels, is more environment-friendly
than APU, however, it causes gas emissions and noise. For
this reason, Korean Air refrains from using mobile GPU
while instead utilizes GPS.
Environmental Audit by Independent Expert
Zero Violation of Environmental Regulations
Environmental Value & Responsibilities
OTHER ENVIRONMENTAL ACTIVITIES
OTHER ENVIRONMENTAL ACTIVITIES
2007 SUSTAINABILITY REPORT
51
Korean Air puts into action a wide
range of environmental activities
based on systematic environmental
management system and strict control
measures
With an aim at minimizing environmental
impact on communities and preserving
the global environment, Korean Air practices comprehensive environmental protection activities. Korean Air rigidly controls wastes, chemical materials, and
wastewater while also making diligent efforts to prevent soil pollution. At the same
time, Korean Air is engaged in various energy and resource conservation initiatives
and campaigns thereby both saving on
costs and preserving the natural environment.
Wastes
Korean Air's aircraft maintenance, operation and transport services produce various types of
wastes, which can be classified into general waste, mostly from transport services, and industrial waste, generally from maintenance works. Food wastes, from in-flight catering services,
are all incinerated while paper, wood, cans, and plastic bottles are sorted and recycled.
Classification of Wastes
Waste from cabin services including newspaper, magazine and
Onboard Waste
plastic bottles (Separated and recycled)
Catering Waste
Waste from in-flight meal services (All subject to incineration)
General Waste
Waste from offices and airport operations (Separated and recycled)
Industrial Waste
Oil and fuel waste from aircraft maintenance works
(All subject to commissioned treatment)
● Waste Disposal
Korean Air rigorously adheres to waste treatment regulations for the disposal of waste generated during operations and maintenance. In addition, it fully devotes its effort to reduce general
amount of wastes and increase recycling. As of 2006, the total amount of waste was reported to
be 18,268 tons, with 6,991 tons of this recycled. Even though passenger numbers increased
3%, thanks to our waste disposal program, the total waste generated in 2006 was 700 tons less
than the previous year.
Amounts of Waste By Treatment Method
7.0%
1.5%
Total Amount
38.3%
18,268 tons
53.2%
Commissioned
Recycled
Sold off
Incinerated
9,710 tons
6,991 tons
282 tons
1,285 tons
52
Recycled Amount
(Unit: tons)
8,000
6,227
6,006
2000
2001
6,517
6,230
6,075
2003
2004
7,436
6,991
2005
2006
6,000
2007 SUSTAINABILITY REPORT
OTHER ENVIRONMENTAL ACTIVITIES
4,000
2,000
0
2002
Chemical Materials
Most of the chemical products used in airplane maintenance are pre-selected by aircraft manufacturers. Korean Air has been in close communication with aircraft manufacturers to use innovative, modern and more environmentally-friendly chemical products.
Currently, as many as 1,000 chemical products are used by Korean Air for aircraft maintenance. In 2006, the Internet-based Korean Air Chemical Management System (KCMS) was developed for the integrated management of chemical materials used in worksites.
The KCMS offers real-time online information on the turnover of chemical materials, contributing to further accountability of chemical management and work efficiency. The Material
Safety Data Sheet (MSDS) is continually updated and monitored so that employees are fully
conscious of how hazard specific chemical materials may be. Korean Air remains alert to any
potential problems involved in the operation of such programs and seeks to further enhance
future systems.
Korean Air Chemical Management System (KCMS)
Information on Product Distribution
・Storage in Warehouse/Delivery
from Warehouse, Total Stock
・Warehouse, Recipient
Identifying and Managing Hazardous
Chemical Materials
・Identifying Hazardous Chemical Materials
・Identifying New Materials or Materials
Requiring Safety Checks
KCMS
Safe and Efficient Management of Chemical
Products
・Safe Management of Hazardous Chemical
Products at Workplaces
・Inquiries regarding Chemical Materials by
kg in Storage Unit
・Sharing the MSDS of Duplicate Products
(Prevention of Overlapping Production)
Information on Chemical Materials
・40,000 Types of Existing/Poisonous/
Observed Materials
・Precautionary Prohibition of
Classification as Restricted-use
MSDS * Information
・Constituting Elements and Content
・Storing Unit and Calculation of
kg Conversions
Offering Information on Rapid Distribution
・Monitoring the Transport of Chemical
Materials throughout the Company
・Distributed Amounts by Products and
Materials
・Inquiries on Distributions to Factories,
Departments and Worksites KCMS
*MSDS: Material Safety Data Sheet
Places
Types of Chemical Materials
Amount of Use (kg)
Line and Base Maintenance Center
255
39,803
Powerplant Maintenance Center
76
244
Gimhae Plant
142
59,896
Commercial Aerospace Plant
340
205,366
Defense & Aircraft Mod Plant
222
99,163
1,035
402,473
Total
Wastewater
● Wastewater Treatment
In order to protect water resources and prevent pollution, Korean Air operates 16 wastewater
treatment centers. Korean Air applies a 50-75% stricter water discharge standard than is required by law. The wastewater treatment process is monitored in real-time by the TeleMetering System (TMS).
Pollutant Load by Wastewater Treatment Center in 2006
Places
Amount of Wastewater
Indicator
Discharged (m3/year)
Gimhae Plant
Computer Center
Shingal Training Center
Flight Crew Training Center
233,044
11,424
5,714
2,489
Jeongseok Runway
(Main Building)
Jeongseok Runway
2,813
3,557
(Dormitory)
Jeongseok Aviation Museum
COD Pollutant Load by Wastewater Treatment
Center in 2006
1016
(Unit: kg / year)
818
800
700
600
500
400
300
200
69
100
34
30
0
Pollutant Load
(kg/year)
BOD
6.82
1,588.6
SS
3.35
780.7
BOD
11.23
128.3
SS
11.13
127.1
BOD
4.65
26.6
SS
9.50
54.3
BOD
12.03
68.7
SS
11.70
66.9
BOD
9.06
25.5
SS
12.17
34.2
BOD
8.03
28.6
SS
10.93
38.9
BOD
10.52
75.7
SS
11.18
80.5
● Anti-icing & De-icing
1000
900
7,200
Average
Concentration (mg/ℓ)
7
In winter, no accumulation of ice, snow or frost on aircraft is acceptable before departure. In
order to scrap aircraft surfaces free of such accumulations, fluids containing propylene glycol,
which is biodegradable and environment-friendly, are used. An average of 900 liters of such
fluids is used for de-icing B747 aircraft. Anti-icing and de-icing operations are conducted on
worksites equipped with drainage facilities. In case such operations have to be done outside
due to snowstorm and flight delays, all used de-icing fluids are collected from the ground using special collecting vehicles and disposed of by an approved private vendor.
53
OTHER ENVIRONMENTAL ACTIVITIES
2007 SUSTAINABILITY REPORT
Use of Chemical Materials
Incheon Cargo Terminal
Bucheon Powerplant
Maintenance Center
Gimpo KAL Building
Incheon Hangar
Gimpo Catering Center
Gimhae Plant
54
Use of Anti-icing and De-icing Fluids
(Unit: ㎘)
1,317
1,400
1,200
2007 SUSTAINABILITY REPORT
OTHER ENVIRONMENTAL ACTIVITIES
1,000
800
600
351
400
374
213
197
292
238
2005
2006
200
0
2000
2001
2002
2003
2004
● Aircraft Washing
Korean Air washes its aircraft regularly to preserve the protective paint and remove contamination from the surface. Airplanes are washed in an exclusive 70 square meters space using
environment-friendly detergents. Wastewater from aircraft washing is sent to wastewater disposal facility for treatment and discharge.
● Aircraft Painting
Korean Air has a hangar exclusively reserved for aircraft paint work, which is done in a way
that produces no toxicity or strong odor. As many as 170 ventilators are installed on the ceiling,
with also a transparent air curtain screen in place to confine hazardous odor.
In case of the need for paint stripping, plastic grains, not chemical materials, are used. Also,
less hazardous and more environment-friendly, water-soluble paints are used on the aircraft
of Korean Air. In addition, an electrostatic painting method is applied in order to raise the absorption rate of paints by more than 80%. This method does much to cut down on dust as well
as save materials. Dust generated during paint work is purified in a facility beneath the hangar
before removal.
Soil Pollution Prevention
Korean Air has oil storage facilities at nine of its worksites. Every year, extensive soil pollution
checks are conducted at the facilities. In 2005, Korean Air detected soil contamination in the
250㎥ area at the jet fuel storage facility on Yul Island near the Incheon International Airport.
The contamination was thought to have occurred during oil transfer operations. In response,
Korean Air restored 1,000㎥ of soil around the polluted area using a land farming method.
Resource Management
With the UN Framework Convention on Climate Change going into effect and oil prices at high
levels for a prolonged period, Korean Air has redoubled its efforts to prudentially manage its
energy resources. Particularly in 2006, for a more systematic management of energy use, we
developed a web program capable of monitoring and analyzing energy use in all worksites.
According to this system, due to growth in operations, Korean Air's electricity and oil consumption slightly rose in 2006.
Resource Use in 2006
Unit
Electricity
MWh
55
Amount of Use
2005
2006
114,405
121,123
5.9%
Change
LNG
m3
4,244,886
4,231,990
-0.3%
Water/ Wastewater
Ton
1,905,442
1,532,562
-19.6%
ℓ
9,194,465
9,405,230
2.3%
MWH
14,591
10,937
-25.0%
ℓ
72,582
68,145
-6.1%
Oil
Medium Temperature Water
LPG
Energy Costs Breakdown in 2006
5%
2%
9%
10%
Total
KRW21.3 billion
52%
22%
GHG Emission during Energy Consumption in 2006
Air Pollutant Generation at Gimhae Plant
(Unit: kg/year)
6,000
5,400
5,000
4,135
4,000
121,123 MWh
GHG emission (tCO2e*)
51,356
Oil
9,405,230 ㎘
26,915
Neutral Gas
4,231,990 m3
10,462
Environmental Activities at Gimhae Plant in 2006
2,000
1,282
1,000
1,077
205 194
Dust
CO
2006
Water Contaminants Discharge at Gimhae Plant
(Unit: kg/year)
1,200
1,016
938
800
600
431
427
400
200
COD
SS
2005
Korean Air's Gimhae Plant manufactures fuselage and wing parts while also conducting
maintenance work for commercial and military aircraft. The plant, based firmly on its environment management system, recycles used products and takes the utmost efforts in applying environmentally friendly operational procedures.
SOX
NOX
2005
0
Consumption
Electricity
*CO2e (equivalent): CH4 and N2O were converted to CO2-equivalent
3,000
1,000
Type
3,470
3,314
0
Electricity
Oil
Neutral Gas
Water Supply/Sewage
Medium Temperature Water
Others
COD
SS
2006
For instance, recognizing possible adverse effects of military jet test flights on the environment near the Gimhae International Airport, Korean Air investigated cases of repeated
detrimental impact on the environment and published them in book from in 2006.
Furthermore, we overhauled and complemented our check-lists for test flights to
strengthen maintenance discipline. As a result, the number of test flights were reduced
which led to a significant reduction of environmental impact caused by oil use, gas emission and noise. Further, we increased the use and recycling of a special vinyl material, used
to manufacture commercial aircraft wings, thereby curbing raw material use and wastes.
OTHER ENVIRONMENTAL ACTIVITIES
2007 SUSTAINABILITY REPORT
Type
Economic Value
& Responsibility
Stable and steady economic performances not only offer stakeholders new value, but also
become a base for mutual growth. While devoted to its basic mission of providing
transportation services, and despite a difficult management environment, Korean Air has
achieved stable growth every year by conducting various activities to reinforce
competitiveness. Korean Air will further strive towards steady growth and an abundant
future for its stakeholders.
6.16%
Operating Profit Margin
2006
5.70%
2005
5.33%
2004
Economic value & Responsibility
Economical Responsibilities for Stakeholders
2007 SUSTAINABILITY REPORT
ECONOMICAL RESPONSIBILITIES FOR STAKEHOLDERS
58
Despite an unfavorable business environment, Korean Air is continuing a trend of
stable growth through active effort.
In 2006, Korean Air achieved sound
growth both in sales and operating incomes, overcoming adverse business
conditions such as rising oil prices and
high interest rates.
Based on continual steady growth, we
are targeting KRW8,650 billion in sales
and KRW640 billion in operating incomes for 2007.
2006 Economic Performances
Korean Air's sales increased approximately 6.5% to KRW8, 078 billion while its operating incomes rose 15.0% to KRW497.4 billion. Thanks to an increase in air passengers and the load
factor, sales increased significantly. The fuel cost, the largest overhead in operating expenses,
swelled 17.2% from a year before due to prolonged high oil prices. However, total expenses
climbed a mere 6.0% thanks to a decrease in foreign currency expenses due both to a stronger
KRW and a steady effort to decrease costs.
Economic Distribution for Stakeholders
Creation of value for stakeholders is the core goal for the sustainable development of Korean
Air. Korean Air has the economic responsibility to distribute profits out of its business activities
to various stakeholders such as customers, employees, business partners and communities.
The following chart gives a general description of Korean Air's economic profit sharing with
various stakeholders in 2006.
(Unit : In billions of KRW)
Customer
Operating Revenue from Air Transportation,
Aerospace, Catering and Hotel/In-Flight Sales:
KRW8,078
Economic Responsibilities for
Stakeholders
Investments
Salaries & Wages KRW917.7
Employees
Investment into Aircraft
KRW781.4
Employee Benefits KRW198.3
Fuel Expense KRW2,371.0
Others KRW667.2
Shareholders KRW7
Suppliers
Other Investments KRW64.1
Noise Charges KRW3.1
Service Expense KRW47.9
Interest Expense KRW407.5
Social Welfare Funds KRW13.1
Public
Organizations
National Tax / Local Tax and etc. KRW76.1
Corporate Income Tax KRW104.8
Flight Hours・Total Fleets
(Unit: 1,000 hours)
(Unit: fleet)
150
600
500
400
117
116
457
465
121
502
90
72
300
120
60
200
37
202
30
100
11
20
1969
0
105
0
1980
1990
2004
2005
Flight Hours
2006
Total Fleets
Economic Goals in 2007
Korean Air aims to achieve KRW8,650 billion in sales and KRW640 billion in operating incomes
in 2007. This goal entails increasing operating incomes by more than KRW100 billion, from the
previous year, under the adverse conditions of rising oil prices and high interest rates. We are
planning to put our utmost effort into steady service development, new market development,
and the creation of new demands. While launching services to Madrid, Johannesburg and
Amman, we will develop our global network through an expansion of the Sky Team network
and cooperation with new airlines.
We will introduce four new advanced B777 passenger jets and one B737 passenger jet while
remodeling two old B747 passenger jets into freight carriers. This strategy will both modernize
our passenger fleet and expand our supply of freight carriers. Notably, this year, Korean Air introduces the ERP (Enterprise Resource Planning) in earnest. Through the ERP, Korean Air is
building an advanced airline system in name and reality by upgrading the overall corporate
system and establishing world-best practices.
Major Tasks in 2007
Passengers・Cargoes Transported
(Unit: 1,000 persons)
(Unit: 1,000 tons)
25,000
21,457 21,709 22,353
20,000
2,118
2,020 1,984
15,000
2,000
1,500
12,259
10,000
Expansion of a Growth Base
by Developing New Business
and Markets
Raising Profitability by
Strengthening Sales Power
and Cutting Down on Costs
Raising Productivity through
Higher Material Efficiency
1,000
5,000
500
3,601
696
0
2,500
Korea Air will seek sound growth on the basis of absolutely safe flights and stronger profitability. Moreover, we will actively improve prices by enhancing the quality of our services and raise
productivity in each sector.
3
1969
511
143
1980
●
0
1990
Passengers Transported
2004
2005
2006
●
Cargoes Transported
●
●
●
●
Total Assets・Total Sales
(Unit : In billions of KRW)
13,739.0 13,568.6 13,584.7
15,000
●
Expanding Routes to China and
Southeast Asia
Promoting Overseas Sales
Raising Competitiveness Along with
the Upgrade of Equipment
Expediting New Business and
Stabilizing It Earlier
●
●
Improving Prices Steadily
Expanding Proportion of
High-Class Sales
Stricter Cost Management and
Minimization of Costs Per Unit
Strengthening Crisis Management
on Oil Prices, Foreign Exchange
Rates and Interest Rates
●
●
●
Raising Instrument and Equipment
Operation Ratio
Strengthening Efficiency in
Manpower and Asset Management
Executing Restructuring Steadily
Such as Expanded Outsourcing
in Non-Core Sectors
Reinforcing Financial Stability
12,000
9,000
8,077.9
7,210.9 7,584.2
6,000
3,000
0
5.7
3.6
1969
737.4
558.7
1980
2,903.3
Support for Export and Import Activities of Companies
1,679.1
1990
Economic Contribution of Aviation Industry
In the 21st Century, the aviation industry contributes to the globalization of the world
economy while taking the lead in activating global business and a revolution in logistics.
2004
Total Assets
2005
2006
Total Sales
The aviation industry promotes the construction of airport facilities and directly affects
supports for manufacturers' export and import. It also a dynamic engine in boosting the
national and local economies.
Realization of Global Travel, Tourism and Modernized Society
Capital
500
(Unit : In billions of KRW)
400
363.3 363.3
363.3
2004
2006
300
200
174.0
100
0
1.5
28.4
1969 1980
1990
2005
Due to travel and tourism, the global air transportation industry helps create much profit in
many sectors, such as accommodation, shopping, and cultural tourism. It also plays a vital
role in enhancing the quality of life in remote regions by connecting medical and educational
sectors there to the outside world.
59
ECONOMICAL RESPONSIBILITIES FOR STAKEHOLDERS
2007 SUSTAINABILITY REPORT
Business Performances of Korean Air for 37
Years since its privatization
Economic value & Responsibility
2006 Operating Results
60
Operating Results
Operating Revenues
Net Income
2007 SUSTAINABILITY REPORT
2006 OPERATING RESULTS
(Unit : In billions of KRW)
10,000
(Unit : In billions of KRW)
400
6.50%
7,584.2
8,000
383.0
8,077.9
9.11%
300
6,000
200
200.4
4,000
100
2,000
0
2005
0
2006
2005
2006
Revenue Breakdown by Business
8,077.9
7,584.2
612.2
618.5
(Unit: In billions of KRW)
3,732.5
4,144.8
2,321.7
187.9
49.4
34.6
639.6
2,370.8
211.6
51.3
36.5
650.7
Domestic Passenger
International Passenger
Cargo
Aerospace
In-flight Sales Revenue
Hotel/Limousine
Others
2005
2006
Revenue Breakdown by Route (Passenger)
(Unit: In billions of KRW)
612.2
769.7
638.0
1,395.5
Total
4,757.0
441.0
304.1
596.6
Domestic
Japan
China
Southeast Asia
Oceania
North America
Europe
612.2
638.0
441.0
596.6
304.1
1,395.5
769.7
Revenue Breakdown by Route (Cargo)
29.3
112.3
(Unit : In billions of KRW)
178.8
611.4
395.5
Total
2,370.8
31.3
1,012.2
Domestic
29.3
Japan
112.3
China
178.8
Southeast Asia
395.5
Oceania
31.3
North America 1,012.2
Europe
611.4
(Unit: 10,000 km)
(Unit: 100 hours)
40,000
30,000
36,010
27,850
4,017
31,957
33,180
4,565
4,653
28,720
5,024
6,000
Category
Current ratio
4,500
4,225
Debt-to-equity ratio
20,000
3,000
Debt-to-asset ratio
10,000
1,500
0
0
2002
2003
2004
2005
Flight Distances
2006
Operating profit margin
1,177
1,200
1,119
1,092
934
300
250
202
198
212
177
Return on equity (ROE)
200
50
0
2004
2005
Jet Fuel Consumption
2006
0
Carried Tons
Total Fleet
Category
Operating revenue growth
(Unit: aircraft)
150
120
117
116
121
Net income growth
Total assets growth
90
Asset turnover ratio
72
60
30
0
Total liabilities
Total shareholders' equity
Borrowings
Total assets
Operating income
Interest expenses
x100
58.72%
49.22%
x100
236.78%
210.48%
x100
55.82%
52.26%
x100
1.11
1.2
Ratio
Formula
Operating income
Operating revenue
Net income
Operating revenue
Net income
Total assets
Net income
Total shareholders' equity
2005
2006
x100
5.70%
6.16%
x100
2.64%
4.74%
x100
1.47%
2.82%
x100
5.11%
9.11%
Growth & Activities Indices
Operating income growth
117
Current liabilities
2006
150
100
2003
Return on assets (ROA)
200
400
2002
Net income margin
989
800
170
Current assets
2005
Profitability
Category
(Unit: 10,000 tons)
(Unit : In millions of gallon)
600
Interest coverage ratio
Ratio
Formula
Flight Hours
Jet Fuel Consumption・Carried Tons
1,000
61
Stability
Ratio
Formula
Operating revenue in CY
Operating revenue in PY
Operating income in CY
Operating income in PY
Net income in CY
Net income in PY
Total assets in CY
Total assets in PY
2005
2006
x100-100
5.18%
6.51%
x100-100
12.62%
14.99%
x100-100
-61.43%
91.15%
x100-100
-1.24%
0.12%
0.56
0.59
Operating revenue
(Basic total assets + YE total assets)/2
Balance Sheet Summary
Category
1990
2003
2004
2005
2006
Carried Passenger
(Unit: 10,000 passengers)
2,500
2,142
2,135
2,171
Total assets
9,539.7
9,209.3
Total shareholders' equity
4,028.9
4,375.4
Income Statement Summary
1,500
1,266
1,000
500
0
2004
13,584.7
Total liabilities
Category
2003
2006
13,568.6
2,235
2,000
1990
(In billions of KRW)
2005
2005
2006
(In billions of KRW)
2005
2006
Operating revenues
7,584.2
8,077.9
Gross profit
1,692.3
1,773.4
Operating income
432.5
497.4
Ordinary income
253.0
487.9
Net income
200.4
383.0
2006 OPERATING RESULTS
2007 SUSTAINABILITY REPORT
Flight Distances・Flight Hours
Organization map
Chairman & CEO
62
Chairman's Office
Board of Directors
President & COO
Management Committee
2007 SUSTAINABILITY REPORT
ORGANIZATION MAP
Audit Committee
Non-standing Director
Nominating Committee
Internal Auditing
Legal Affairs
Facilities & Environment
Corporate Safety, Security & Compliance
Passenger Business DIV.
Cargo Business DIV.
Flight Operations DIV.
Passenger Business Planning &
Administration
Cargo Business Planning &
Administration
Flight Operations Planning
Passenger Network & Revenue
Management
Cargo Network & Revenue
Management
Flight Operations Technical Support
Passenger Strategy & Development
Cargo Strategy & Development
Airport Customer Service
Cargo Logistics & Service
Line Operations
Purchasing
Information Technology
Corporate Communications
Domestic Revenue Management &
Planning
Flight Operations Quality Assurance
Aerospace Business DIV.
Flight Crew Training Center
Marketing Communications
Corporate Strategy & Planning DIV.
Flight Standards
Marketing & Planning
Korean Air Service Center, Korea
Plant Operations
Human Resources DIV.
Customer Airlines Service Center
Employee Relations
Sports Administration & Support Office
Catering Business DIV.
Korea Institute of Aerospace
Technology
Maintenance & Engineering DIV.
Maintenance Planning
Defense & Aircraft MOD Plant
Engineering
Commercial Aerospace Plant
Human Resources Development Center
Hotel & In-flight Sales Business DIV.
Human Resources
Cabin Service DIV.
General Affairs
Material Supply
Gimhae Admin. Office
Maintenance Quality Assurance
Maintenance Training Center
Cabin Crew Operations Planning
Aeromedical Service Team
Gimhae Maintenance Center
Cabin Crew Operations
Corporate Finance DIV.
Revenue Accounting
Finance Affairs Team
Finance
Accounting
Operations Control DIV.
Scheduling
Operations Control
Fuel Management Team
Emergency Provision Team
Defense Affairs Team
Line & base Maintenance Center
Customer Service
Powerplant Maintenance Center
Board of Directors
BOARD OF DIRECTORS
2007 SUSTAINABILITY REPORT
63
01
01. Cho, Yang Ho
Chairman & CEO
02. Lee, Jong Hee
President & COO
02
03
04
05
06
03. Lee, Tae Hee
General Counsel
Senior Partner
LEE & KO
04. Lee, Won Young 05. Kim, Seung Yu
06. Hong, Young Chul
Director
Director
Director
President
Chairman and CEO
Chairman & CEO
Hanjin Transportation
Hana Financial Group
KISWIRE
07. Park, Oh Soo
08. Kim, Jae Il
Director
Director
Professor
Professor
Seoul National University
Seoul National University
09. Lee, Im Soo
10. Kim, Young Ho
11. Lee, Sog Woo
Director
President
Director
Lawyer
Korean Air Passenger
Lawyer
Kim & Chang Law Firm
Business Division
Doo-re Law Firm
07
08
09
10
11
Sales Office Directory
64
[ Korea ]
Booking Service
Central Sales
(02) 1588-2001
(02) 1588-2001
Central Airport Terminal Sales
2007 SUSTAINABILITY REPORT
SALES OFFICE DIRECTORY
(02) 1588-2001
Airport Cargo Traffic Office
Incheon
(032) 742-5731
Airport Service Office
Busan
(051) 970-3232
Cheongju
(043) 213-9223
Daegu
(053) 983-0183
Gimpo
(02) 2656-5005
Gunsan
(063) 471-5001
Gwangju
(062) 942-0116
Incheon
(032) 742-5176
Jeju
(064) 713-9109
Jinju
(055) 853-5113
[ Japan ]
Penang
Japan Toll Free Service
(0088-21-2001)
Phuket
Siem Reap
(855) 6396-4881
Airport Office
Singapore
(65) 6542-0623
(018) 886-8188
District Cargo Office
Aomori
(017) 729-0511
Bangkok
(662) 137-4807
(138) 59-3323
Hakodate
Chennai
(9144)2232-6028
Kagoshima
(099) 558-3763
Delhi
(62361) 768-377
Nagasaki
(095) 824-3188
Kuala Lumpur
(603) 8787-4110
Oita
(097) 537-3316
Penang
(604) 644-2099
Singapore
(65) 6542-0685
Airport Service Office
Fukuoka
(092) 477-7561
Regional Office
Nagoya
(569) 38-0750
Kuala Lumpur
(603) 2144-0200
Nigata
(025) 271-5541
Phnom Penh
(855)092511-025
Osaka
(724) 56-5111
Bangkok
(662) 267-0985
Tokyo
(476) 32-7561
Guam
(671) 642-3216
District Cargo Office
Hanoi
(844) 934-7247
Ho Chi Minh City
(848) 824-2878
(054) 284-6722
Fukuoka
(092) 441-4104
Ulsan
(052) 288-0711
Nagoya
(569) 38-0663
(033) 344-0163
Yangyang
(033) 671-5856
Yeosu
(061) 683-7502
District Sales Office
Incheon
(032) 882-5627
Masan
(055) 296-2006
Suwon
(031) 239-3539
Regional Cargo Sales Office
Busan
(051) 461-7101
Seoul
(02) 756-0747
Regional Office
Daegu
(053) 606-2055
Jakarta
Kota Kinabalu
Regional Cargo Sales Office
Osaka
(06) 6263-8892
Tokyo
(03) 5443-3372
Regional Office
Gangwon (Chuncheon) (033) 253-5561
(6676) 328-540
Akita
Pohang
Wonju
(604) 646-0829
Manila
(6088) 252-735
(632) 815-9262
Mumbai
(9122)2200-4805
Penang
(604) 646-6149
Singapore
(65) 6796-2001
Taipei
Komatsu
(076) 261-9255
Niigata
(025) 244-3320
Okayama
(086) 221-3357
[ Oceania ]
Sapporo
(011) 210-3311
Airport Service Office
Regional Passenger Sales Office
(6221) 521-2180
Auckland
Sydney
(8862)2518-2200
(09) 255-0130
(2802) 9669-6466
Fukuoka
(092) 441-3390
Nagoya
(052) 586-3318
Regional Office
Osaka
(06) 6263-8885
Auckland
(09) 914-2000
Tokyo
(03) 5443-3351
Brisbane
(07) 3226-6000
Daejeon
(042) 862-2001
Nadi
(679) 672-1043
Gwangju
(062) 384-9660
Sydney
(02) 9262-6000
Jeju
(064) 750-8333
Regional Passenger Sales Office
Busan
Seoul
(051) 461-7272
(02) 1588-2001
[ Southeast Asia ]
[ China ]
Airport Service Office
Bangkok
(662) 134-2459
Denpasar
(21) 521-2180
Ho Chi Minh City
(848) 848-6702
Jakarta
(021) 550-2389
KathMandu
(9771) 425-2048
Kuala Lumpur
(603) 8787-3499
Manila
(632) 832-5974
China Call Center
(40065-88888)
Airport Service Office
Beijing
(010) 6459-0556
Dalian
(411) 8388-5900
Guangzhou
(020) 3606-7455
Hong Kong
(852) 2769-7511
Paris
(532) 8471-6321
Airport Service Office
Shanghai
(021) 6835-5618
Anchorage
Shenyang
(024) 2273-6781
Atlanta
(404) 761-7691
Tianjin
(022) 2439-8844
Chicago
(773) 686-2730
Dallas
(972) 973-7051
Honolulu
(808) 836-1711
Las Vegas
(702) 261-6071
Los Angeles
(310) 646-4866
New York
(718) 751-2000
Regional Cargo Sales Office
San Francisco
(650) 821-0603
Hong Kong
Seattle
(206) 241-1576
Toronto
(905) 676-8440
Vancouver
(604) 276-9535
Washington
(703) 572-2430
District Cargo Office
Beijing
(010) 6454-3665
Shanghai
(021) 5208-2123
Tianjin
(022) 8488-8272
(852) 2215-3572
Regional Office
Beijing
Changsha
(010) 8453-8421
(907) 248-8875
(731) 479-9701
Dalian
(411) 8365-8505
Guangzhou
(020) 3877-3878
Jinan
(531) 8611-8847
District Cargo Office
Toronto
(905) 672-7473
District Sales Office
Anchorage
(907) 243-3329
(532) 8338-0221
Atlanta
(770) 955-2118
(898) 8828-9184
Chicago
(773) 686-2730
Shanghai
(021) 5208-2080
Dallas
(972) 973-4134
Shenyang
(024) 2334-1880
Honolulu
(808) 836-8702
Shenzhen
(755) 2750-0466
San Francisco
(650) 821-0603
Tianjin
(022) 2330-8219
Seattle
(206) 243-3425
Ulaanbaatar
(97611) 32-6643
Toronto
(416) 862-2555
Vancouver
(604) 248-1146
Washington
(703) 572-2419
Kunming
(871) 315-8299
Qingdao
Sanya
Weihai
(631) 864-5599
Wuhan
(027) 8548-7119
Xiamen
(592) 268-0140
Xian
(029) 8836-1937
Yanji
(433) 291-8824
Yantai
(535) 660-5389
Regional Passenger Sales Office
Los Angeles
(213) 484-5722
New York
(212) 326-5008
Regional Passenger Sales Office
Hong Kong
(852) 2733-7110
[ Europe/Middle East ]
Airport Service Office
Frankfurt
(69) 697-64610
[ America ]
London
(20) 8897-0030
U.S. Canada Toll Free Service
(1-800-438-5000)
Moscow
(495) 956-4632
Airport Cargo Traffic Office
District Cargo Office
Los Angeles
Brussel
(310) 417-5266
Airport Cargo Traffic Office New York
(718) 632-5553
Paris
Copenhagen
Frankfurt
London
(1) 4862-6161
(02) 751-8085
(45) 3251-2025
(69) 695-0361
(20) 8750-4701
Vienna
(1) 4816-9945
(1) 7007-32522
65
Regional Office
Amsterdam
Cairo
Dubai
Frankfurt
(20) 655-6333
(2) 576-8255
(4) 337-7003
(69) 695-0370
Istanbul
(212) 465-2650
London
(20) 7495-8641
Milan
(02) 7209-5654
Moscow
(495) 725-2727
Paris
(1) 4297-3080
Prague
(2) 2011-6827
Rome
(06) 6595-5952
Vladivostok
(4232) 433-444
Zurich
(43) 443-6061
SALES OFFICE DIRECTORY
2007 SUSTAINABILITY REPORT
Qingdao
Overseas Network
2007 SUSTAINABILITY REPORT
OVERSEAS NETWORK
66
Passenger
Cargo
Passenger & Cargo
OVERSEAS NETWORK
2007 SUSTAINABILITY REPORT
67
2007 SUSTAINABILITY REPORT
DOMESTIC-CHINA/JAPAN NETWORK
Domestic-China/Japan Network
68
Fleet
Total fleet: 121 (Passenger: 101 Freighter: 20) as of 31 Dec. 2006
69
B747
■ Boeing 747-400 Passenger
Engine Type: PW4056 . Seating Capacity: 384 . Maximum Payload: 49.25 tons
Maximum Distance: 12,821km . Maximum Duration: 14.14 hours
■ Boeing 747-400ERF
Engine Type: PW4062A . Maximum Payload: 117.55 tons
Maximum Distance: 8,415km . Maximum Duration: 9.22 hours
A330
AIRBUS 330 (19)
■Airbus 330-300 Passenger
Engine Type: PW4168/4168A . Seating Capacity: 296/352
Maximum Payload: 44.84 tons . Maximum Distance: 7,582/8,541km
Maximum Duration: 8.51/9.57 hours
■ Airbus 330-200 Passenger
Engine Type: PW4168A . Seating Capacity: 258 . Maximum Payload: 37.58 tons
Maximum Distance: 10,303km . Maximum Duration: 11.59 hours
B737
BOEING 737 (31)
■ Boeing 737-800 Passenger
Engine Type: CFM56-7B24 . Seating Capacity: 164/149
Maximum Payload: 8.4 tons . Maximum Distance: 2,968/4,781km
Maximum Duration: 3.42/5.55 hours
■ Boeing 737-900 Passenger
Engine Type: CFM56-7B24 . Seating Capacity: 188
Maximum Payload: 9.1 tons . Maximum Distance: 2,291km
Maximum Duration: 2.53 hours
B777
BOEING 777 (16)
■ Boeing 777-200 Passenger
Engine Type: PW4090 . Seating Capacity: 301 . Maximum Payload: 50.42 tons
Maximum Distance: 12,538km . Maximum Duration: 14.07 hours
■ Boeing 777-300 Passenger
Engine Type: PW4090/98 . Seating Capacity: 376 . Maximum Payload: 66.04 tons
Maximum Distance: 9,352km . Maximum Duration: 10.26 hours
A300
AIRBUS 300 (10)
■Airbus 300-600 Passenger
Engine Type: PW4158 . Seating Capacity: 276/266
Maximum Payload: 34.11 tons . Maximum Distance: 6,121/3,519km
Maximum Duration: 7.27/4.22 hours
FLEET
2007 SUSTAINABILITY REPORT
BOEING 747 (45)
Sustainable future
GRI INDEX (2002)
Reported
70
GRI Indicator
Not Reported
Not Applicable
Check
Page
G3
●
12~13, 36~37
1.2
●
4~5
1.1
Ⅰ. Vision and Strategy
1. 1
Statement of the organization's vision and strategy regarding its
contribution to sustainable development
2007 SUSTAINABILITY REPORT
GRI INDEX (2002)
1. 2
Statement from the CEO
Ⅱ. Organization Profile
2. 1
Name of reporting organization
●
6
2.1
2. 2
Major products and/or services
●
8~9
2.2
2. 3
Operational structure of the organization
●
62~63
2.3
2. 4
Description of major divisions, operating companies, subsidiaries,
●
6~9, see‘06 Annual Report
2.3
and joint ventures
2. 5
Countries in which the organization's operations are located
●
7, 64~68
2.4/2.5
2. 6
Nature of ownership, legal form
●
6~9
2.6
2. 7
Nature of markets served
●
2. 8
Scale of the reporting organization
●
6~9
2.8
2. 9
List of stakeholders, key attributes of each, and relationship to the
●
13, 36
4.14
8~9, 58~59, see‘06 Annual Report 2.7
reporting organization
Ⅲ. Report Scope
2.10
Contact person(s) for the report, including e-mail and web addresses
●
79
3.4
2.11
Reporting period
●
cover flap
3.1
2.12
Date of most recent previous report
●
cover flap
3.2/3.3
2.13
Boundaries of report and any specific limitations on the scope
●
cover flap
3.6
2.14
Significant changes in size, structure, ownership, or products/services
●
7
2.9
●
6, see '06 Annual Report
3.8
that have occurred since the previous report
2.15
Basis for reporting on joint ventures, partially owned subsidiaries,
leased facilities, outsourced operations
2.16
Explanation of any re-statements of information provided in earlier reports
●
0
3.11
2.17
Decisions not to apply GRI principles or protocols in the preparation of the report
●
cover flap, 70~73
3.6
2.18
Criteria/definitions used in any accounting for costs and benefits
●
58
3.9
2.19
Significant changes from previous years in the measurement methods
●
2.20
Policies and internal practices to enhance accuracy, completeness, and reliability
●
76
3.5
2.21
Policy and current practice with regard to providing independent assurance
●
76
3.9
2.22
Means by which report users can obtain additional information
●
Flap
3.4
Ⅳ. Governance Structure and Management Systems
3. 1
Governance structure of the organization
●
14
4.1
3. 2
Percentage of the board of directors that are independent, non-executive directors
●
14, 63
4.2
3. 3
Process for determining the expertise board members need to guide
●
14
4.2~4.7
●
14
4.2~4.7
●
see‘06 Annual Report
4.5
●
14, 62
4.7
●
10~11, 13, 36~37, 39~40
4.9
the strategic direction
3. 4
Board-level processes for overseeing the organization's identification and
3. 5
Linkage between executive compensation and achievement of financial and
management of risks and opportunities
non-financial goals
3. 6
Organizational structure and key individuals responsible for oversight,
implementation, and audit of policies
3. 7
Mission and values statements, codes of conduct or principles, and polices relevant
to economic, environmental, and social performance and the status of implementation
GRI Indicator
3. 8
Mechanisms for shareholders to provide recommendations or
3. 9
Basis for identification and selection of major stakeholders
3.10
Approaches to stakeholder consultation reported in terms of
Check
Page
G3
14
4.4
●
13, 36
4.15
●
22~33
4.16
4.16
●
71
direction to the board of directors
3.11
Type of information generated by stakeholder consultations
●
22~33
3.12
Use of information resulting from stakeholder engagements
●
22~33
4.17
3.13
Explanation of whether and how the precautionary approach or
●
14, 40
4.11
3.14
Externally developed, voluntary charters, principles, or initiatives to which
●
17~18
4.12
principle is addressed by the organization
the organization subscribes or which it endorses
3.15
Principal memberships in industry and business associations, and/or
advocacy organizations
●
15, 17, 29, 42~43
4.13
3.16
Policies and/or systems for managing upstream and downstream impacts
●
15~19, 28, 39~44, 47, 50, 59
4.8
3.17
Approach to managing indirect economic, environmental, and
●
15~19, 28, 39~44, 47, 50, 59
social impacts resulting from activities
3.18
Major decisions during the reporting period regarding the location of,
●
or changes in operations
3.19
Programmes and procedures pertaining to economic, environmental, and
●
15~19, 28, 39~44, 47, 50, 59
●
15, 19, 29, 39~40
4.9
social performance
3.20
Status of certification pertaining to economic, environmental, and
social management systems
Ⅴ. Economic Performance
EC 1
Net sales
●
58~61
EC1
EC 2
Geographic breakdown of markets
●
60
EC1
EC 3
Cost of all goods, materials, and services purchased
●
58
EC 4
Percentage of contracts that were paid in accordance with agreed terms
●
18
EC 5
Total payroll and benefits broken down by country or region
●
26~27, 57
EC7
EC 6
Distributions to providers of capital broken down by interest/dividends
●
58
EC1
Increase/decrease in retained earnings at end of period
●
61
EC1
EC 8
Total sum of taxes of all types paid broken down by country
●
58, see '06 Annual Report
EC 9
Subsidies received broken down by country or region
●
see '06 Annual Report
●
58, see '06 Annual Report
EC11 Supplier breakdown by organization and country
●
see '06 Annual Report
EC12 Total spent on non-core business infrastructure development
●
see '06 Annual Report
EC8
EC13 The organization's indirect economic impacts
●
59
EC9
EN1
on all classes of shares
EC 7
EC10 Donations to community, civil society, and other groups broken down
EC4
in terms of cash and in-kind
Ⅵ. Environmental Performance
EN1
Total materials use other than water by type
●
54~55
EN2
Percentage of materials used that are wastes from external sources
●
51~52
EN2
EN3
Direct energy use segmented by primary source
●
13, 43
EN3
EN4
Indirect energy use
●
55
EN4
EN5
Total water use
●
55
EN6
Location and size of land owned, leased, or managed in biodiversity-rich habitats
●
EN11
EN7
Description of the major impacts on biodiversity
●
EN12
EN1
GRI INDEX (2002)
2007 SUSTAINABILITY REPORT
frequency of consultations by type
2007 SUSTAINABILITY REPORT
GRI INDEX (2002)
72
GRI Indicator
Check
Page
G3
EN 8 Greenhouse gas emissions
●
42, 49, 50, 55
EN16/17
EN 9 Use and emissions of ozone-depleting substances
●
42, 49, 50
EN19
EN10 NOx, SOx, and other significant air emissions by type
●
42, 49, 50
EN20
EN11 Total amount of waste by type and destination
●
51~52
EN22
EN12 Significant discharges to water by type
●
53~54
EN21
EN23
EN13 Significant spills of chemicals, oils, and fuels in terms of total number and
●
54
EN14 Significant environmental impacts of principal products and services
total volume
●
38, 41~42, 46~50
EN15 Weight percentage and reclaimed percentage of recyclable products
●
EN16 Incidents of and fines for non-compliance with all applicable
●
EN2
50
EN28
international declarations
EN17 Initiatives to use renewable energy sources and to increase energy efficiency
●
43~45, 51
EN6
EN18 Energy consumption footprint of major products
●
13, 43~44, 55
EN3/4
EN19 Other indirect energy use (energy-intensive materials etc)
●
55
EN20 Water sources and related ecosystems/habitats significantly affected by use of water
●
EN21 Annual withdrawals of ground and surface water
●
55
EN8
EN22 Total recycling and reuse of water
●
55
EN10
EN23 Total amount of land owned, leased, or managed for production
●
EN7
EN9
EN11
activities or extractive use
EN24 Amount of impermeable surface as a percentage of land purchased or leased
●
EN25 Impacts of activities and operations on protected and sensitive areas
●
EN26 Natural habitat changes caused by operational activities
●
EN27 Objectives, programmes, and targets for protecting and
●
EN14
EN28 Number of IUCN Red List species with habitats in areas affected by operations
●
EN15
EN29 Business units currently operating or planning operations in or
●
EN12
EN30 Other relevant indirect greenhouse gas emissions
●
EN17
EN31 Basel convention wastes
●
EN24
EN32 Water sources and related ecosystems/habitats significantly affected
●
EN25
restoring native ecosystems and species
around protected or sensitive areas
by discharges of water and runoff
EN33 Environmental performance of suppliers
●
EN34 Significant environmental impacts of transportation used for logistical purposes
●
38
EN29
EN35 Total environmental expenditures by type
●
40
EN30
Ⅶ. Social Performance
LA 1
Breakdown of workforce
●
27
LA1
LA 2
Net employment creation and average turnover segmented by region/country
●
27
LA1/2
●
27
LA4
LA 3
Percentage of employees represented by independent trade union organizations
LA 4
Policy and procedures involving information, consultation, and negotiation
with employees over changes
●
24~27
LA5
LA 5
Practices on recording and notification of occupational accidents and diseases
●
19
LA7
LA 6
Description of formal joint health and safety committees comprising
●
15~16, 28
LA6
16, 19
LA7
LA10
management and worker representatives
LA 7
Standard injury, lost day, and absentee rates and number of work-related fatalities
●
LA 8
Description of policies or programmes on HIV/AIDS
●
LA 9
Average hours of training per year per employee by category of employee
●
25
LA10 Description of equal opportunity policies or programmes
●
24~27
LA11 Composition of senior management and corporate governance bodies
●
14, 27
LA13
GRI Indicator
Check
Page
G3
LA12 Employee benefits beyond those legally mandated
●
LA13 Provision for formal worker representation in decision making or management
●
27
LA14 Occupational Health Management Systems
●
19, 28
LA15 Formal agreements with labor unions covering health and safety at work
●
19, 28
LA6
LA16 Description of programmes to support the continued employability of employees
●
24~26
LA11
LA17 Specific policies and programmes for skills management or for lifelong learning
●
24~26
HR 1 Policies related to human rights protection
●
24~27
HR 2 Human rights in investment and procurement decisions
●
HR 3 Human rights performance of suppliers
●
29
HR 4 Policies, procedures and programs to prevent discrimination
●
24~27
HR 5 Description of freedom of association policy
●
27
HR 6 Description of policy excluding child labour
●
HR 7 Description of policy to prevent forced and compulsory labour
●
HR 8 Employee training on policies and practices concerning all aspects of human rights
●
HR 9 Description of appeal practices, including, but not limited to, human rights issues
●
HR10 Description of non-retaliation policy and effective,
●
GRI INDEX (2002)
2007 SUSTAINABILITY REPORT
LA8
HR6
HR7
24~26
confidential employee grievance system
HR11 Human rights training for security personnel
●
HR12 Description of policies, guidelines, and procedures to
●
30~33
HR13 Description of jointly managed community grievance mechanisms/authority
HR8
●
30~33
HR14 Share of operating revenues from the area of operations that are
●
58
●
30~33
●
17~18
SO3
10~11
2.10
address the needs of indigenous people
redistributed to local communities
SO1
Description of policies to manage impacts on communities
in areas affected by activities
SO2 Policy and compliance mechanisms for organizations and employees
addressing bribery and corruption
SO3
Policy and compliance mechanisms for managing political lobbying and contributions
●
SO4
Awards received relevant to social, ethical, and environmental performance
●
SO5
Amount of money paid to political parties and institutions whose prime function
●
SO6
SO7
is to fund political parties or their candidates
SO6
Court decisions regarding cases pertaining to anti-trust and monopoly regulations
●
SO7
Policy, procedures/management systems for preventing anti-competitive behavior
●
18
PR 1 Policy for preserving customer health and safety
●
15~16
PR 2 Policy and compliance mechanisms related to product information and labelling
●
22~23
PR 3 Policy, procedures/management systems, and
●
23
SO7
PR4
compliance mechanisms for consumer privacy
PR 4 Number and type of instances of non-compliance with
regulations concerning customer health and safety
PR2
●
PR 5 Product and service related complaints
●
PR 6 Voluntary code compliance, product labels or awards with respect to social and/or
●
10~11
2.10
22~23
PR5
environmental responsibility that the reporter is qualified to use or has received
PR 7 Regulations on product information and labeling
●
PR 8 Policy, procedures/management systems, and compliance
●
73
26~27
PR4
mechanisms related to customer satisfaction
PR 9 Advertising - voluntary adherence to standards
●
PR6
PR10 Number and types of breaches of advertising and marketing regulations
●
PR7
PR11 Number of substantiated complaints regarding breaches of consumer privacy
●
PR8
GLOSSARY
74
ASK
GPU
Available Seat Kilometer. The product of an airline is
Ground Power Unit. A device used on the ground at airports
transporting power. Transporting power is the number of
to supply aircraft without an APU (Auxiliary Power Unit) with
seats multiplied by the distance. When one seat flies one
electric power.
2007 SUSTAINABILITY REPORT
GLOSSARY
kilometer, it is one ASK.
GRI
AFTK
Global Reporting Initiative. Independent from the non-
Available Freight Ton Kilometer. One Ton Kilometer refers
permanent institution under UNEP, it was established in
to one ton of passengers or cargo transported 1km. This
1997 with the aim of developing and disseminating a
unit is the available tonnage of freight for each route
universal Sustainability Reporting Guidelines to be used in
multiplied by the distance.
corporate
economic,
environmental,
and
social
performance reporting.
CAEP
Committee on Aviation Environmental Protection. ICAO's
IATA
current environmental activities are largely undertaken
The International Air Transport Association. The general
through the Committee on Aviation Environmental
organization of international commercial aviation, with
Protection (CAEP), which was established by the Council in
headquarters in Geneva. It is a UN cooperative body for
1983. CAEP assists the Council in formulating new policies
around 270 of the world's airlines. In addition to the general
and adopting new Standards on aircraft noise and aircraft
meeting and executive committee, it consists of six standing
engine emissions.
committees including the Cargo Committee, Financial
Committee, Industry Affairs Committee, Operations
C.A.S.E
Committee, Environmental Committee, and Legal
Coordinating Agency for Supplier Evaluation. CASE is a
Committee. (http://www.iata.org)
nonprofit coalition of industrial companies dedicated to
sharing non-prejudicial supplier data. Starting as an American
ICAO
airline coalition in 1980, it now offers its data to all airlines.
The International Civil Aviation Organization. A United
Nations agency, with its headquarters in Montreal. The
Emissions Trading Scheme
constitution of ICAO is the Convention on International Civil
A market-based approach to achieving environmental
Aviation, drawn up by a conference in Chicago in November
objectives that allows those reducing greenhouse gas
and December 1944, and to which each ICAO Contracting
emissions below what is required under the Kyoto Protocol
State is a party. According to the terms of the Convention,
to use or trade the excess reductions to offset emissions at
the Organization is made up of an Assembly, a Council of
another source inside or outside the country.
limited membership with various subordinate bodies and a
Secretariat. (http://www.icao.int)
EPNdB
Effective Perceived Noise Decibels. A unit commonly used in
ICAO Annex 16
aviation to express the average perceived noise level.
Aircraft noise and emission standards established in ICAO
Annex 16
GHG
Greenhouse Gases. Gaseous substances of the atmosphere
that contribute to the greenhouse effect. CO 2 (Carbon
Dioxide), CH 4 (Methane), N 2 O (Nitrous Oxide), HFCs
(Fluorocarbons), CFCs (Chlorofluorocarbons) and SF 6
(Sulfur hexafluoride) are major GHGs.
RTK
Depending on the existing requirements for certification,
Revenue Ton Kilometer. One Ton Kilometer refers to one
aircraft must comply with the noise standards established in
ton of passengers or cargos transported 1km. This unit is
Chapters 2, 3, 4 and 5 of ICAO Annex 16. All aircraft newly
the tonnage of revenue for each route multiplied by the
certified from 2006 must meet the regulations of the Chapter
distance.
4 noise standard, which is 10 decibels or more below
Chapter-3 noise levels. Noise levels are measured at three
Sustainable Management
points: at 6,500 meters from the beginning of the runway,
A business philosophy which subscribes to the belief that a
450 meters to the side of the runway for departure, and at
company can achieve sustainable development by taking the
2,000 meters in front of the runway threshold for landing.
lead and responsibility for the economic, environmental and
social aspects of its operations. Such effort can give a
IOSA Certificate
company a competitive edge while improving its overall value.
IATA Operational Safety Audit. The IATA Operational Safety
Audit (IOSA) Program is an internationally recognized and
Sustainability Report
accepted evaluation system designed to assess the
A report that publicly discloses an organization's economic,
operational management and control systems of an airline.
environmental and social performances to satisfy the needs
IOSA uses internationally recognized quality audit
of various stakeholders for information about overall
principles, and is designed so that audits are conducted in a
organizational performance.
standardized and consistent manner. Eight operational
areas are closely reviewed including-Corporate
UNFCCC
Organization & Management Systems, Flight Operations,
United Nations Framework Convention on Climate Change.
Flight Dispatch, Aircraft Engineering & Maintenance, Cabin
The international treaty unveiled at the United Nations
Operations, Aircraft Ground Handling, Cargo Operations,
Conference on Environment and Development (UNCED) in
and Aviation Security. Certification is only issued when the
June 1992. The UNFCCC commits signatory countries to
company meets international standards in all areas. Korean
stabilize anthropogenic greenhouse gas emissions to levels
Air passed the audit without a single documented finding
that would prevent dangerous anthropogenic interference
and received accreditation in January 2006.
with the climate system.
Kyoto Protocol
Codifies binding goals for reducing emissions of
greenhouse gases. It was passed in 1997 as an amendment
to the protocol concerning the formulation of the United
Nations Framework Convention on Climate Change
(UNFCCC) and was ratified in February 2005.
NOx
The sum of NO and N2O compounds and are generated in
combustion processes under high pressures and
temperatures. The ICAO has continued to tighten its
regulations on NOx emissions from 20% in 1993 to 16% in
1999 and, then again, to 12% in 2004, which will go into
effect in the approvals of aircraft engines manufactured
from 2008.
75
GLOSSARY
2007 SUSTAINABILITY REPORT
ICAO CHAPTER 3, 4
About the Korean Air 2007 Sustainability Report
2007 SUSTAINABILITY REPORT
ABOUT THE KOREAN AIR 2007 SUSTAINABILITY REPORT
76
The Publication of the Report
As part of its means of communicating with various stakeholders, Korean Air has been publishing its sustainability reports on
economic, environmental and social activities and performances under the title of‘Sustaining Excellence’since 2005. With a
view to raise the credibility of the report, we comply with global standards on the production of the report. We will put our
utmost effort into developing the report further, to match the status of Korean Air as a global carrier, by expanding the
contents and scope of the report every year, and therefore, sharing more information with stakeholders.
The Production Process of the Report
We have strived to elevate both objectivity and reliability of all the contents in the 2007 Sustainability Report by mentioning the
overall management activities of Korean Air along with stakeholders’opinions. The report has been drafted by the
Environment Team of Korean Air in accordance with the production guidelines on the basis of standards recommended by the
GRI Guideline and in considering the situation of the Company. The team also invited members of contents-related
departments to the production process. The Environment Team planned and reorganized the contents of the report, on the
basis of the draft, and allowed a review of related departments and management before printing.
*The numbers of departments and employees that took part in the production of the Report (21 departments and 33 employees)
Improvements in the Report
The 2007 Sustainability Report is based on the 2002 Sustainability Report Guidelines of the GRI. However, some items are not
relevant to the air transportation business, or do not satisfy conditions for public release due to internal conditions of the
Company. Collecting further opinions from stakeholders is necessary to strengthen the completeness and inclusiveness as
required in the GRI Guidelines. External verification processes are also needed for objective accuracy. Korean Air well
understands these matters for improvements and is committed to improving them in phases during the production of the next
reports.
Korean Air's Previous Publications
2001
First Environmental
Report
2002
2003
2004
2005
2006
First Environmental
& Social Report
Sustainability Report
2007
77
FEEDBACK
FEEDBACK
2007 SUSTAINABILITY REPORT
Your feedback regarding this sustainability report is welcome and appreciated.
Please complete the survey and send to the address below.
1. Which of the following stakeholder groups do you belong to?
Employee
Shareholder
Customer
Alliance or Rival
Supplier/Subcontractor
Community near airport/NGO
CSR expert
Media
Academic body
Public Administration
None of the above :
2. Which sections of the report did you find most interesting/relevant?
Company Profile
Social Values & Responsibilities
Environmental Values & Responsibilities
Economic Values & Responsibilities
3. Did you find any sections of this report to be insufficient, incomplete or inadequate? If so, please elaborate.
Company Profile
Social Values & Responsibilities
Economic Values & Responsibilities
Environmental Values & Responsibilities
None of the above :
Cut along the dotted line
4. We welcome any comments or criticisms regarding this report.
Thank you for completing the survey. Your comments are greatly appreciated and will be used to improve future reports.
Please mail or fax the survey to the following contact points:
Environment Team, Facilities & Environment Department, Korean Air
Add: 1370, Gonghang-dong, Gangseo-gu, Seoul, Korea
Website: www.koreanair.com
TEL +82-2-2656-7461,5512
FAX +82-2-2656-7447
E-mail: baejunghwan@koreanair.com / kimmsun@koreanair.com
Korean Air moves ahead in
realizing an e-aviation era.
We are fast approaching an era when
passengers complete the traveling
process, from reserving tickets to
boarding airplanes, by themselves.
Korean Air is operating automatic
ticketing kiosks at the airport to offer
quicker and more convenient
services. At these kiosks, customers
can find various services such as seat
selection, ticketing, reservation onsite and the issuance of receipts.
Using the automatic ticketing kiosk,
customers can complete their
boarding processes much quicker
than the conventional process and
select their favorite seats as well.
Any comments or inquiries are welcome. Feel free to contact us at the followings:
Environment Team, Facilities & Environment Department, Korean Air
#1370, Gonghang-dong, Gangseo-gu, Seoul, Korea (157-712)
Tel: (02) 2656-7461/5512 Fax: (02) 2656-7447
E-mail: baejunghwan@koreanair.com / kimmsun@koreanair.com
Website : http://www.koreanair.com
EXCELLENCE
IN FLIGHT
We will be an internationally acclaimed airliner committed to
principles and standards by returning to fundamentals.
Korean Air is preparing for a dynamic rise as a global leading
airline company competing successfully with other major
leading airliners. We will solidify our corporate culture by
offering the best services to customers, by making social
contributions, by protecting the environment, and by
establishing strict safety standards as our fundamental
principals.