SUSTAINING EXCELLENCE
2014 Korean Air Sustainability Report
ABOUT THIS REPORT
CONTENTS
The Korean Air sustainability report is published yearly and this is the ninth issue since its first
publication in 2006. It was prepared in accordance with the GRI G4 Guidelines, covering the
company’s sustainability management strategies and accomplishments economically, socially
and environmentally. Verified credibility of data and information contained in the report was
provided by a third party assurer, whose report is included. Korean and English publications are
available at our corporate website: www.koreanair.com.
02
Letter from the CEO
04
Company Profile
Reporting Guidelines
- In accordance with the ‘Comprehensive’ option of the GRI (Global Reporting Initiative) G4
Guidelines
- The contents were structured to cover the material issues as identified in the 2014
materiality analysis results
14
Business Ethic
16
Crisis Management
Reporting Period
- January through December 2013 (partially obtained from 1H 2014 performance)
- Qualitative data collected over past three years (2011-2013) for trend analysis
Reporting Scope
- All business premises of Korean Air, including its head office as well as its domestic and
overseas branches (data related to its subsidiaries or affiliates are not included in this
edition as they had little impact on business activities of Korean Air.
08Routes
10
Vision and Business Philosophy
12Governance
18
Materiality Test
20
Value Created from Korean Air’s Business Activities
22
Growth for Excellence
30
People for Excellence
42
Greening for Excellence
56
Value for Excellence
66
Harmony for Excellence
76
Appendix
77
UN Global Compact
Report Assurance
- GRI G4 and AA1000AS standards (assured by Korean Standards Association)
78
Awards and Associations
79
GRI Index
Significant Changes from the Previous Report
- On August 1, 2013, Hanjin KAL was established through equity spin-off of the former Investment Project Division.
85
Third Party Assurance Statement
Additional Information
Korean Air’s corporate website: (www.koreanair.com)
Korea’s Financial Supervisory Service’s electronic disclosure system: (http://dart.fss.or.kr)
Contact Information
Korean Air Environment Team (Environment and Construction Management Department)
SELAFE@koreanair.com / Tel. +82-2-2656-5512
The Centennial
Since the first, historical scheduled commercial airline flight in the world that flew 30 km from St. Petersburg Port to Tampa Bay on January
1, 1914, the global airline industry has developed far beyond expectations over the past century and has become an essential part of
world industry and global cultural exchange. Whether it is bringing together Seoul and New York or Mumbai and Cape Town, the airline
industry has closed both the geographical and psychological gaps between people from all corners of the globe.
Now, can you imagine another 100 years from now and the kind of further advances in travelling and cargo transport that could bring
about even more change to our lives? Amidst these changes, what kind of role would the aviation industry contribute?
Join us in taking a glimpse at a world Korean Air appreciates as much as it understands when it comes to a sustainable future
economically, socially and environmentally.
LETTER FROM
THE CEO
02
SUSTAINING EXCELLENCE
KOREAN AIR
2014 SUSTAINABILITY REPORT
LETTER FROM THE CEO
Dear stakeholders,
We will then embrace innovation and a bettered functioning model to build
a more flexible and dynamic organizational structure. While maintaining a
scope on market movements and trends to stay ahead, we will further improve our customer service framework to enable a flexible and prompt response to customer needs.
I would like to first express my heartfelt appreciation for your
continued support and encouragement in Korean Air. As a leading global carrier, Korean Air has emerged as a top link in the
industry with continued support and partnerships among vast
backgrounds.
As we publish the ninth issue of our sustainability report, we
made absolutely sure that it explicitly and implicitly communicated the company’s endeavors towards balanced sustainability
in all the triple bottom-lines with our stakeholders.
Looking back on 2013, the aviation industry faced a great deal of challenges
due to the delayed global economic recovery, unstable political developments
on the Korean peninsula, skyrocketing oil prices and the Won’s appreciation
against Yen. These challenges, however, catalyzed Korean Air to strive for
a consolidated growth of its foundation in various areas under the motto of
“co-prosperity.” This encouraged a concentrated focus on not only internal
but outbound cooperation.
Its close partnership with Czech Airlines (CSA) helped Korean Air bolster its
competitive edge in the European market, while the new non-stop routes
to Colombo, Sri Lanka, and Male, Maldives, further promoted an expansion
of its Asian network. Furthermore, our customer service was upgraded with
state-of-the-art aircraft fleets, the A380 and B747-8F, bringing about an
enhancement of fuel efficiency and cost competitiveness in our fleet operations. From early on, we always paid attention to the growth potential of the
unmanned aerial vehicles (UAV) market and have focalized our R&D efforts
into developing a wide array of UAVs.
Currently, however, the uncertainties of the market have yet to dissipate.
Making concerted efforts to preemptively respond to these uncertainties
and risk factors in the market is our primary task. Under the shared goal of
‘solidifying a growth through fundamental restructuring,’ we will reexamine
the structure of our functioning to create thorough, profit-oriented business
plans and enhanced productivity at a reduced cost.
We will continue endeavors towards ‘optimal flight scheduling’ based on improved efficiency in our mobilization of not only the fleet but all resources
available. According to our fleet modernization plan, we anticipate the reception of seven new high-efficient aircrafts, comprising of five passenger airplanes including the two A380s and two cargo aircrafts, B747-8F and B777F,
and have readied for the disposal of old planes, the B747-400 passenger
plane and A300-600 cargo aircraft. Our first scheduled routes to Houston,
U.S.A., will be the first step in our multi sector advancement with high growth
potential around the world, equipping us with profitable routes.
Our 45th anniversary serves a significant marking point to go back to our
roots under the founding philosophy: “national contribution through transportation.” It specifically implicates that of corporate social responsibility and
its national obligation. Korean Air was founded upon this philosophy and we
will renew our commitment to fulfilling our social and national responsibility
through a meaningful and successful transportation industry.
On the global front, as a member of the UN Global Compact, Korean Air will
continue to comply with the ten-point principle including human rights, labor,
environment and anti-corruption, while partaking in causes for the less-privileged to fulfill our role as a respected and admired corporate citizen.
Over a 100 year-history, the commercial airlines industry has established
itself as an industry of infinite growth potential linking the globe together. As
the airplane has enabled the achievement of man’s long-cherished dream of
being able to fly, Korean Air will also continue its journey towards achieving
the dream of a better future for all.
We look forward to your joining us on this journey.
Thank you.
Chairman & CEO Cho Yang-ho
03
COMPANY
PROFILE
SUSTAINING EXCELLENCE
KOREAN AIR
Korean Air was founded in 1969 as the nation’s first airliner. Celebrating its 45th anniversary in 2014, its business
portfolio extends beyond its main businesses—passenger
and cargo transportation—to include aircraft component
R&D and MRO (maintenance, repair and overhaul) services as well as related businesses, including catering/inflight sales, hotel/limousine services.
Corporate Overview
KOREAN AIR LINES.CO., LTD.
No. of Employees
20,567 (including overseas employees)
Headquarters
260 Haneul-gil (1370 Gonghang-dong),
Gangseo-gu, Seoul, Korea
Fleet
147 aircrafts
Routes
125 destinations in 44 countries
TEL
+82-2-2656-7114
23.40 million
Website
http://www.koreanair.com
No. of Passengers
Carried
Main Business Areas
Passenger/cargo transportation, aerospace,
catering service, in-flight sales, limousine service
Freight Carried
1.45 million tons
Subsidiaries
The company’s electronic disclosure at
http://dart.fss.or.kr
Company Name
04
Sales
KRW 11,712.4 billion
* Figures stand for FY 2013 ending on December 31, 2013
Sales Performance for FY 2013
(KRW in billions)
Sales
11,712.4
Operating Revenue
10,096.3
755.0
861.1
Others
Ancillary
2014 SUSTAINABILITY REPORT
COMPANY PROFILE
Operating Results
Passenger (Unit: 10,000 persons)
Cargo (Unit: 10,000 tons)
2,340
145
1,665
International
Domestic
675
136.6
International
8.4
Domestic
Sales by Business Area
05
Air Transportation (Unit: KRW billion)
Passenger
Cargo
Others
2011
7,024.3
2011
3,497.2
2011
771.4
2012
7,690.3
2012
3,098.8
2012
841.5
2013
7,267.1
2013
2,789.4
2013
900.9
* Others include the revenue from in-flight sales, flight mileage
service, ground operations and warehousing.
Others (Unit: KRW billion)
Aerospace
Catering Service
Hotel & Limousine Service
2011
393.6
2011
74.2
2011
44.6
2012
497.7
2012
85.7
2012
47.7
2013
638.2
2013
91.7
2013
25.1
SUSTAINING EXCELLENCE
KOREAN AIR
Korean Air 45 Years’ Milestones
Flight Hours (Unit: 1,000 hours)
Fleet (Unit: aircrafts)
615
147
615
385
06
202
Sales (Unit: KRW billion)
147
●
112
72
●
11,712.4
●
●
5,659.0
●
1,679.1
106
20
37
●
●
3.6
11
●
●
●
●
●
1980
1990
2000
2013
1960's
1969
1980
●
558.7
●
1969
11,712.4
1990
2000
2013
1970's
1969
●
1980
1990
2000
2013
1980's
1969
Jun. 1962 Founding of Korean Air Lines Corporation
Mar. 1969 Privatization of Korean Air by
Hanjin Corporation
Oct. 1969 Launching of company’s first
international route
Oct. 1969 Introduction of Boeing’s quad-jet B720
Apr. 1971 First scheduled transpacific cargo
service to U.S.
Apr. 1972 First scheduled passenger service to
U.S. (Seoul-Tokyo-Honolulu-Los Angeles)
May 1973 Introduction of Boeing’s B747
Jumbo to transpacific routes
Dec. 1981 Completion of Korean Air international air
cargo terminal construction at Los Angeles
International Airport
Sep. 1982 Delivery of first home-manufactured
jetfighter F-5-E/F Jegong No. 1
Jan. 1983 Introduction of Total
Passenger Service System (TOPAS), a passenger
reservation and ticketing system
2014 SUSTAINABILITY REPORT
COMPANY PROFILE
Passengers (Unit: 10,000 persons)
Cargo (Unit: 10,000 tons)
2,340
145
2,340
2,207
Total Assets (Unit: KRW billion)
145
20,964.3
20,964.3
10,748.0
●
●
1,226
(Unit: KRW billion)
298.9
●
174.0
●
07
51
2,903.3
350
70
14
0
●
●
●
5.7
2000
2013
1969
1990's
28.4
737.4
1.5
1980
1990
2000
2013
1969
●
●
●
●
1990
●
●
●
●
1980
●
●
●
1969
337.8
298.9
126
●
Total Shareholders’ Equity
1980
2000's
●
1990
2000
2013
1969
1980
1990
2000
2013
2010's
2013
May 1992 First graduates from Korean Air Pilot
Training School
Jun. 2000 Agreed to SkyTeam global alliance with
other founding member airliners
Mar. 2012 Completed enterprise resource planning
(ERP) system
Mar. 1995 Reception of 100th aircraft
(B747-400)
Nov. 2003 Launched Audio Video on Demand (AVOD)
Apr. 2013 Celebrated 10th anniversary of
Mongolian Afforestation Project
Feb. 1998 Received Mercury Award in
catering service category
Oct. 2003 Completion of eight A380 aircraft order
purchase
Jan. 2005 Obtained IOSA (IATA Operation Safety Audit)
certificate from International Air Transport Association
(IATA)
ROUTES IN
SERVICE
SUSTAINING EXCELLENCE
KOREAN AIR
As the nation’s leading global carrier, Korean Air connected the Incheon International Airport to 125 cities in
44 countries around the world as of the end of 2013. Our
commitment continues to remain devoted to providing expedient yet safe and convenient flights to our passengers
flying toward all corners of the world, spearheading the
cultural and industrial exchanges with numerous nations
throughout the world.
Anchorage
●
Vancouver
●
Seattle
● New Routes
●
26 cities
Las Vegas
San Francisco
Destinations in China
08
Shenyang
Honolulu
Mudanjiang
Weihai
Los Angeles
●
Qingdao
Jinan
●
Wuhan
●
Kunming
Dalian
●
●
Shanghai/Pudong
Shanghai/Hongqiao
●
●
●
●
●
●
●
Changsha
●
●●
Miami
Atlanta
●
●
●
Chengu
●
Taipei
Destinations in the
Americas
15 cities
●
Hangzhou
Sao Paulo
Xiamen
Guangzhou
Huangshan
Shenzhen
Nanjing
●
Hong Kong
Revenue from Passenger Routes (Unit: KRW billion)
KOREA
JAPAN
CHINA
SOUTHEAST ASIA
OCEANIA
AMERICAS
EUROPE/THE MIDDLE EAST/
AFRICA
CIS
●
●
●
●
●
●
●
Dallas
●
●
●
●
Washington D.C.
●
Beijing
Xian
●
New York
●
Yanji
Tianjin
Zhengzhou
●
●
●
Urumqi
Toronto
Chicago
Revenue from Cargo Routes (Unit: KRW billion)
525.1
726.7
896.1
1,294.5
3,07.6
2,366.6
1,027.2
123.3
KOREA
JAPAN
CHINA
SOUTHEAST ASIA
OCEANIA
AMERICAS
EUROPE/THE MIDDLE
EAST/ AFRICA
CIS
16.4
128.4
322.1
391.2
32.3
1,153.5
722.0
23.5
2014 SUSTAINABILITY REPORT
ROUTES IN SERVICE
Stockholm
Destinations in Korea
13 cities
Destinations in Europe,
Middle East and Africa
29 cities
Oslo
Hakodate
Irkutsk
Copenhagen
Sapporo
London/Heathrow
Saint Petersburg
● ●
●
●
Madrid
●
Ulaanbaatar
●
●
●
Paris
●
●
●
●
●
●
Frankfurt
Wonju/Hoengseong
Pohang
Cheongju/Daejeon
Ulsan
●
●
Chiang Mai
●
Tel Aviv
Gunsan
Kathmandu
●
Rome
●
Cairo
●
Milan
●
●
●
Basel
Colombo
Riyadh
Brussels
●
Bangkok
Male
●
Jeddah
●
●
Phuket
Penang
●
● ●
●●
●
●●
●
●●
●
●
Yeosu/Suncheon
Hanoi
Mumbai
●
Zurich
Gwangju
Siem Reap
●
Dubai
●
●
● ●
Ho Chi Minh
●
●
●
●
Phnom Penh
●
●
●
●
Cebu
Jinju/Sacheon
●
Tokyo/Haneda
09
●
●
● ●
●
●
Nagoya
Okayama
Oita
Jeju
Busan
●
●
Kagoshima
Fukuoka
Nagasaki
Guam
Palau
Kota Kinabalu
● ●
Destinations in Japan
Destinations
in Southeast Asia
Nairobi
21cities
Bali
Nadi (Fiji)
Jakarta
Brisbane
15 cities
●
Sydney
●
●
(Unit: %)
●
●
●
Kuala Lumpur
Singapore
Market Share
in Sales
●
Osaka
Tokyo/Narita
●
Komatsu
Manila
Da Nang
●
Niigata
Seoul/Incheon
●
Shizuoka
Akita
Seoul/Gimpo
Yangon
Istanbul
Aomori
●
Tashkent
Vienna
●
●
●
Navoi
Prague
●
●
Vladivostok
Amsterdam
●
Zaragoza
Moscow
●
●
Daegu
● KOREA 5.4
● JAPAN 8.5
● CHINA 12.1
● SOUTHEAST ASIA 16.8
● OCEANIA 3.4
● AMERICAS 35.0
● EUROPE/ THE MIDDLE EAST/ AFRICA 17.4
● CIS 1.4
Auckland
Destinations in
Oceania
6 cities
●
VISION & BUSINESS
PHILOSOPHY
SUSTAINING EXCELLENCE
KOREAN AIR
In the pursuit of maximizing the level of customer satisfaction, creating a professional, employee-initiated organization and evolving towards a standard and principle-based
corporate culture, Korean Air believes in finding ways to
partner and grow with its stakeholders.
10
MISSION
OPERATIONAL
EXCELLENCE
EXCELLENCE
>
IN FLIGHT
VISION
SERVICE
EXCELLENCE
INNOVATIVE
EXCELLENCE
>
TO BE A RESPECTED
LEADER
IN THE WORLD AIRLINE
COMMUNITY
2014 SUSTAINABILITY REPORT
Adhering to standards and principles
▶
▶
▶
stablishing standards and principles on
E
par with global standards
ursuing flexibility in business based on
P
standards and principles
Eliminating short-cut business operations
VISION & BUSINESS PHILOSOPHY
Creating an innovated and bettered
corporate culture
Organizational management based on
expertise and autonomy
▶
Embracing a progressive and youthful mindful
▶
Mutual respect for expertise in various fields
▶
Change-embracing organizational culture
▶
▶
uture-oriented reshuffling of business
F
structure by focusing on core competencies
ational decision-making based on an
R
efficient management system
▶
eeking creative solutions through
S
harmonious relations
11
BUSINESS
PHILOSOPHY
PrincipleBased
Management
CustomerOriented
Management
ChangeEmbracing
Management
Creating customer loyalty with highest level
of customer satisfaction
▶
omprehensively and systematically approaching
C
customer relations
▶
Promptly attending to customer needs
▶
aximizing customer value through the Management
M
By Wandering About (MBWA) practices
Appreciation
of Talent
SystemBased
Management
Developing future growth engines with
competent human resources
▶
Formulating a top-tier team
▶
Devoting to fostering of key talent
▶
Gearing toward ‘employee-first’ corporate culture
CORPORATE
GOVERNANCE
12
SUSTAINING EXCELLENCE
KOREAN AIR
A commitment toward a mutual growth motivates Korean Air
to ensure that all its stakeholders’ are properly included in
the decision-making process. Comprising of non-standing
directors with a variety of academic and business backgrounds in law, governmental policies and finance, the board
of directors contribute their profound knowledge to the
management decision-making process while taking note of
the economic, environmental and social impact of such decisions. The diversity of communication media, namely the
corporate website and publications, allow us to share major
management issues and information with stakeholders on a
real time basis. In the future, we will continue to expand our
communication channels to better the reception of all that
are partnered with us.
Board of Directors Composition
Consisting of six standing and seven non-standing directors, Korean
Air’s board of directors (BOD) determines the solution to company
management issues. Four subcommittees under the BOD support the
board with their respective specialties in management, director recommendation, auditing and internal control.
Subcommittees
Management
Committee
Reviews and makes decisions on issues
commissioned by Board of Directors
Three standing and three non-standing directors
Non-Standing
Director Nomination
Committee
Selects candidates for non-standing director positions
Three standing and four non-standing directors
Audit Committee
Monitors the BOD’s activities and the company’s performance
Three non-standing directors
Internal Transaction
Committee
Reviews and approves large-scale internal transactions
One standing and two non-standing directors
Board of Directors (as of Mar. 21, 2014)
Standing
Name
Gender
Position/Career
Date of
Appointment
Term
Remarks
Chairman of the BOD
Cho Yang-ho
Male
Chairman & CEO
Mar. 22, 2013
3 yrs
Chi Chang-hoon
Male
President & COO
Mar. 22, 2013
3 yrs
Lee Sang-kyoon
Male
Senior Vice President & CFO
Mar. 21, 2014
3 yrs
Lee Tae-hee
Male
General Council
Mar. 22, 2013
3 yrs
Mar. 16, 2012
3 yrs
Cho Hyun-ah
Female Senior Vice President & CSO
Cho Won-tae
Male
Senior Vice President & CMO
Mar. 16, 2012
3 yrs
Kim Seung-yu
Male
Chief Director of Hana High School, Former CEO of Hana Financial Group
Mar. 16, 2012
3 yrs
Park Oh-soo
Male
Professor, College of Business Administration, Seoul National University
Mar. 16, 2012
3 yrs
Lee Sog-woo
Male
Lawyer, Doore Law Firm, Former Chief Justice of the South Seoul District Court
Mar. 22, 2013
3 yrs
Lee Yun-woo
Male
Chairman of Geoje Big Island Asset Management, Former Vice President of Korea
Development Bank
Mar. 16, 2012
3 yrs
Hyun Jung-taik
Male
Professor, College of International Trade, Inha University, Vice Chairman of the
National Economic Advisory Council
Mar. 22, 2013
3 yrs
Lee Joo-seok
Male
Advisor to Kim & Chang Law Firm, Former Director of the Seoul Regional Tax Office
Mar. 16, 2012
3 yrs
Ahn Yong-seok
Male
Lawyer, Lee & Ko Law Firm
Mar. 21, 2014
3 yrs
Non-standing
Chief of the Audit
Committee
2014 SUSTAINABILITY REPORT
CORPORATE GOVERNANCE
Ownership Structure
Top Decision-Making Body and Socially
Responsible Management
Shareholder
No. of OwnerTransactions
Shares
ship with Korean Air
18,906,304
31.62
-
3,638,037
6.08
-
Hanil Cement
475,302
0.79
-
Samsung Asset
Management
427,515
0.71
-
Shinyoung Securities
313,191
0.52
-
Cho Yang-ho
National Pension
Fund
Remarks
Specially
interested party
BOD Operational Performance Results
No. of BOD Meetings (meetings)
Evaluation and Remuneration to Directors and
Executives
Attendance Rate of Directors (%)
2011
6
2011
81
2012
8
2012
84
2013
9
2013
78
No. of Approved Agenda Items (items)
At Korean Air, the CEO also takes the chair of the board of directors, commissioning decisions to be made on the overall corporate management issues,
including the sustainability management. Additionally, the Top Management
Council, comprising of the chief officers of each business division, supports the
BOD with constructing policies on company business strategy and sustainability
management. This council serves to reflect the expectations and demands of
stakeholders regarding the company’s economic, social and environmental activities while further examining these issues to formulate the soundest solution
for the entire company. Korean Air arranges regular meetings of this council to
ensure constant monitoring and review of the agenda items and resolutions.
Attendance Rate of Non-standing
Directors (%)
2011
51
2011
89
2012
47
2012
89
2013
47
2013
94
* A total of nine BOD meetings were convened in 2013 to deliberate and
approve such agenda items as the BOD subcommittee composition, spin-off,
and order-placement of new airplanes.
Process to prevent any conflict of interests within
the board
The stipulations of Korean Air’s BOD regulations disqualify directors with vested interests in any particular agenda from the voting rights on the item in question and are therefore unable to partake in the quorum at the meeting.
Remunerations of non-standing directors are determined by the resolutions
founded at the general shareholders’ meeting (GSM). In order to ensure the
independency and expertise in the decision-making process of non-standing
directors, Korean Air does not believe in operating compensation system in
accordance with the rewarding of performance evaluation results. In 2013,
the GSM capped the remuneration of the BOD at KRW 5.0 billion. The actual
payment toward directors amounted to KRW 4.76 billion. Simultaneously acting as standing directors, top executives are compensated based on their
accomplishments toward set goals for sustainability management practices
inclusive of the risk/opportunity factors in the business environment. The median of payments to all Korean Air employees was 2.13 percent of the highest
payment made to a single member.
Stakeholder Communication Channels
Korean Air soundly discloses all major management data to its stakeholders
through communication channels such as investor relations publications, general shareholders’ meetings, IR meetings, and IR websites as well as its business reports, quarterly and semi-annual reports and other regular reports. In
particular, the sustainability report is published with the approval of the vice
presidents and presidents of all Korean Air divisions.
13
BUSINESS ETHICS
SUSTAINING EXCELLENCE
KOREAN AIR
In the pursuit of maximizing the level of customer satisfaction, creating a professional, employee-initiated organization and evolving towards a standard and principle-based
corporate culture, Korean Air believes in finding ways to
partner and grow with its stakeholders.
●
espect the principles of free competition and remain at the forefront of
R
the development of the airline transport industry.
●
ontribute devotedly to the development of society and preservation of
C
the environment.
●
cknowledge the corporate principles set forth by the company and
A
uphold all of our obligations and responsibilities.
CEO’s Commitment to Business Ethics
Korean Air Business Ethics Practices
To be a 세계
respected
leader선도하는
in the world
airline
community
항공업계를
글로벌
항공사
“Korean Air owes much to society for its growth to date making
it our duty to apply transparency and compassion-based business ethics to company management practice. Our particular
focus should be placed on mutual partnerships with suppliers,
ensuring the welfare of local communities, taking action to create a better world and contributing expertise to the development of local communities and co-prosperity with suppliers. In
time, we will be rewarded with a sense of trust enabling us to
further enhance the competitiveness and brand value of Korean Air.”
14
↑
Employee
Ethics
Training
Ethics
training for
employees
● Integrity
pact
● ● ● - Excerpt from Korean Air CEO New Year’s speech on Jan. 2, 2014
Win-Win
Environmental
Transparent Management &
Social
Partnership
Management Sustainability Contribution & Customer
Management
Satisfaction
Business
Ethics
database
● Transparent
corporate
governance
● Internal
control
system
● Compliance
program
● Environmental
management
system
Sustainability
report
Volunteer
corps
● Disaster
relief
activities
● Afforestation
project in
Mongolia
● Donations
● Charter of Ethics
Supplier
support
programs
● Fair
transactions
guidelines/
compliance
program
● Voice of
Customer
(VoC)
● Safety
Management
Program
● Korean Air regards transparency and responsibility as vital management
values. We respect free market principles and abide by relevant rules and
regulations in our business practices. With these principles, we strive to
promote prosperity for the company and society as a whole. As a result,
we vow to abide by Korean Air’s new-instituted Charter of Ethics.
●
Regard customer satisfaction and safety as our highest priority.
●
xert nothing but the best of efforts in increasing investment value for
E
our investors.
●
●
Respect all employees and make an effort to enhance their quality of life.
Promote joint development with our business partners based on mutual trust.
Code of Ethics Behavioral Guidelines
Korean Air Business Ethics Timeline
●
Jan. 2001: Enactment and declaration of Charter of Ethics
●
Oct. 2002: Implementation of ‘Whistle-Blowing’ System
●
Jul. 2012: Appointment of First Compliance Officer
●
Mar. 2014: Introduction of regulations mandating voluntary self-report
of related parties on the same value chain of Korean Air
2014 SUSTAINABILITY REPORT
Charter of Ethics
Behavioral Guidelines
Action Guides
Risk Management
System
BUSINESS ETHICS
Establishes the underlying business philosophy
and business policies
Seven principles of behavioral guidelines
Action plans and clear standards
‘Whistle-Blowing’ system
Compliance Officer
Voluntary self-report of related parties on the
same value chain
Total Hours of Education
International regulations on cartels
Compliance with the antitrust
regulations
How to steer clear of sexual
harassment risks at work
Business ethics practices at
Korean Air
Introduction to the compliance
program
16
1,355
60,327
3,871
16,785
‘Whistle-Blowing’ Program
Raising ethical awareness of employees
All employees are mandated to complete the biennial ethics training course on
the internal self-learning network to be reminded of their commitment to business ethics and submit the integrity pact at the end of the course.
Anti-corruption Education Performance (Unit: persons)
2011
International regulations on cartels
Compliance with the antitrust
regulations
How to steer clear of sexual
harassment risks at work
Business ethics practices at
Korean Air
Introduction to the compliance
program
11
130
21,157
2,221
-
2012
International regulations on cartels
Compliance with the antitrust
regulations
How to steer clear of sexual
harassment risks at work
Business ethics practices at
Korean Air
Introduction to the compliance
program
3
206
21,485
824
Compliance Program
Korean Air has adopted a voluntary compliance program to abide by relevant
rules and regulations regarding fair trade, followed by the establishment of an
internal inspection system for its actual operation. Since the declaration of
the CEO in 2004, Korean Air has set its sights on establishing and promoting
compliance practices with fair trade regulation while setting up an internal organization to prevent any irregularities or cartels within the industry.
-
Internal Control System
2013
International regulations on cartels
Compliance with the antitrust
regulations
How to steer clear of sexual
harassment risks at work
Business ethics practices at
Korean Air
Introduction to the compliance
program
Committed to eliminating all irregularities or corruption from its premises,
Korean Air has been operating the whistle-blowing program since October
2002. Anyone can report witnessed malpractices via e-mail at jebo@koreanair.
com. Reported cases are verified through internal investigation before appropriate measures are taken, such as absolving or correcting corruption, malpractice, and inefficiency in routine or policy. The whistleblower is protected under
the established framework as stipulated in the corporate bylaws and regulations
and provided with feedback on their reports. In 2013, a total of 23 cases were
reported and appropriately processed following the established procedures.
2
1,019
17,685
826
16,785
Korean Air regularly monitors the status of internal operations through the established internal accounting control system, ensuring transparent disclosure
on the company’s accounting information that was verified with its credibility.
The monitoring scope also covers the entire business process, as well as accounting, to detect loopholes and better upon the company’s operations.
15
CRISIS
MANAGEMENT
SUSTAINING EXCELLENCE
KOREAN AIR
Non-financial Risk Management
Risk Types
Market
Risk Factors
●
●
●
Global economic developments
C
ompetitive low-cost airlines
market
G
lobal carriers’ inroads into the
Korean market
Countermeasures
●
Annually checking economic and aviation industry forecasts and trends as well as their
impact on our business, followed by development of necessary countermeasures
●
Pursuing profitable growth through profit-oriented route operations and an enhanced global
network
●
Focusing on high-end customers through strategic operation of high-end fleet and
enhanced customer services
●
Timely response to market changes and customer demands through flexible operations
according to market demands
Operational
●
A
irplane accidents or hijacking
16
●
E
stablishing a safety management system under a safety-first policy
●
O
perating a Safety & Security Office under direct control of the COO to prevent accidents
●
Resource
Environmental
●
Oil price hikes
●
Environmental accidents
●
C
limate change
●
A
nnually performing company-wide drills respond to airplane accidents
●
R
egularly checking contingency plans and revising emergency response procedures
●
O
perating the Safety Coordinators, ‘Go Team’, ‘Care Team’
●
C
onsistently monitoring oil prices and developing purchase strategies
●
O
il price options, oil swaps, etc.
●
●
Regulatory
●
●
Community
●
C
ompliance with local laws and
regulations in each country
C
arbon controls (EU ETS, GHG & Energy
Target Management System, etc.)
Issues concerning local
communities, NGOs, etc.
S
etting procedure for operating a response center by regulation, guidelines, manuals and division
in event of an airplane accident
C
ompliance with pollutant emissions regulations, company-wide environmental risk prevention
activities and environmental accident contingency plans
A
doption and operation of high-efficiency aircrafts, optimal routes and short-cuts, optimization
of fuel loads, economic flight procedures, enhancing aircraft performance
●
G
reenhouse gas inventory system
●
Constantly monitoring all laws and regulations
●
Responding to regulatory risks with legal experts
●
Maximizing efficiency of fuel use and saving costs through strategic operation of low-cost
emissions trading
●
Investing in community development infrastructure
●
Engaging in diverse social contribution activities
●
Expanding communication channels with local communities
2014 SUSTAINABILITY REPORT
CRISIS MANAGEMENT
Financial Risk management
NATURAL HEDGE
Strategies
>
>
Fuel prices
Risk Factors
Foreign exchange rates
Interest rates
ACTIVE HEDGE
Natural Hedge
Active Hedge
●
●
●
B
alancing out the bottom-lines of incoming and outgoing
currencies
K
eeping even percentages of fixed and floating interest
rates of debt portfolio
Fuel prices/Foreign exchange rates: Hedging between the
rate of 30 percent of annual exposure in consideration of
statistical figures and market developments
●
Interest rates: Shifting between the floating rates to fixed
rates under interest rate-swap agreements in accordance
with market conditions.
17
MATERIALITY
TEST
SUSTAINING EXCELLENCE
KOREAN AIR
Korean Air selected the stakeholder groups and ran the
materiality test according to procedure provided by the
GRI G4 Guidelines and the ISO 26000 standard on social
responsibility. Based on the results of the test, the reporting content and methodology was prioritized to cover all
information of concern to our stakeholders.
Reporting Content Definition Process
Materiality Test
Stakeholder interview
Benchmark
Media analysis
Review of material issues
in the previous year
● ● Relevance
● Materiality
● Material Issue List-up
(report contents)
18
* Relevance test: 46 relevant issues were finalized from the issues provided
by the GRI G4, Sustainability Topics for Sector (GRI) in accordance with the
relevance guidelines as provided by the ISO 26000
* Materiality Test: Results of the relevance test verified the issues requiring a
survey were included in the surveys on the internal and external stakeholders.
Survey results were analyzed to finalize the 11 trend issues and 14 impact
issues as the material issues to be covered in this report.
Stakeholder Survey
Category
Internal
Employees
Governmental agencies
Percentage
66
45.5%
3
2.1%
56
38.6%
Affiliates and subsidiaries
1
0.7%
Local communities
1
0.7%
Customers (domestic & global)
External
Frequency
Suppliers
R&D Centers, related organizations
Part-timers/interns
Total
13
9.0%
4
2.8%
1
0.7%
145
100%
2014 SUSTAINABILITY REPORT
MATERIALITY TEST
Materiality Test Outcomes
Changes in Priority 2013 vs. 2014
2013 Key Issues
2014 Key Issues
1
Increased demand for stability of products & services
1
Increased demand for stability of products & services
2
Diversified customer needs
2
3
Increased demand for customer information security
Response to fluctuation in foreign exchange rates
and oil prices
4
Increased demand for business transparency
3
Intensifying market competition
5
Growth in number of customers valuing health,
eco-friendliness and pro-social behavior
4
Increased importance of need for talent
5
Diversified customer needs
6
Active promotion of affordable airline market
6
Health and safety of customers
7
Acceleration of technology advancement
7
Emissions (atmospheric)
8
Intensifying market competition
8
9
Increased importance of need for talent
Growth in global interdependence following
globalization
10
Growth in global interdependence following globalization
9
11
Easy access to corporate information
(via Internet, SNS, etc.)
Growth in number of customers valuing health,
eco-friendliness and pro-social behavior
10
Climate change (global warming)
12
Increased demand for fair transactions
11
Acceleration of technology advancement
13
Health and safety at work
12
Product and service labeling (customer satisfaction)
14
Customer health and safety
13
15
Guarantee of fundamental rights at work
Growth in importance of securing and
managing stable supply chain
16
Digital inclusion
14
Training and education
18 Optimizing socially responsible investment (SRI)
17
Employee education and training
15
Economic achievements
(revenue, pensions, government grants)
20 Growth in demand for fair competition and
win-win partnership
18
Climate change (global warming)
16
Energy consumption
19
Increased exportation of high value-added products
17
Products & Services (environmental impact)
18
Optimizing socially responsible investment (SRI)
19
Market position (wages, procurement, recruitment)
20
Growth in demand for fair competition and
win-win partnership
4.60
◀ Stakeholder Concern
4.40
Increased demand for stability of
products & services
Response to fluctuation in foreign
2 exchange rates and oil prices
Emissions (atmospheric)
Economic achievements
(revenue, pensions, government grants)
Indirect economic benefits (SOC
investments, up-and down-stream
industries, expected benefits)
4.20
14
Energy consumption
Lending business acumen
to social contribution 22
Recruitment
23
(gender, new, part-time)
Corporate governance 24
(stakeholder communication)
7
6 Health and safety of customers
Climate change (global warming)
Growth in global interdependence
following globalization
Training and
education
21
4.00
1
4 Increased importance of need for talent
8
3 Intensifying market competition
12 Product and service labeling (customer satisfaction)
15
16
17
10
5 Diversified customer needs
9 Growth in number of customers valuing health,
eco-friendliness and pro-social behavior
19
11 Acceleration of technology advancement
Market position (wages, procurement, recruitment)
13 Growth in importance of securing and managing
Products & Services
(environmental impact)
3.80
Public recognition of the company as
25
a conservative old-timer
stable supply chain
20 Protection of customer information
3.60
21
Increased demand for fair competition and mutual growth
22
Energy use
23
Product and service labeling (customer satisfaction)
24
Development of importance of securing and
managing a stable supply chain
21
Indirect economic benefits (SOC investments, upand down-stream industries, expected benefits)
25
Market position (wages, procurement, recruitment)
3.40
Impact on the business ▶
3.20
3.20
3.40
3.60
3.80
4.00
4.20
4.40
22
Lending business acumen to social contribution
26 Optimizing socially responsible investment (SRI)
23
Recruitment (gender, new, part-time)
27
24
Corporate governance (stakeholder communication)
25
Public recognition of the company as a
conservative old-timer
Impact of transport on the environment
28 Economic achievements
(revenue, pensions, government grants)
4.60
29
Strategies responding to external factors
30
Stakeholder engagement
31
Wastewater and waste material, CO2 emissions
Changes
32
Fuel consumption
Same
33
Job creation
Down
34
Increased green purchase
Up
19
VALUE CHAIN
SUSTAINING EXCELLENCE
KOREAN AIR
Procurement
Marketing/Sales
Procurement of flight operation supplies
Marketing and sales of Korean Air’s services
PR, advertisement
Manufacturers:
aircrafts, jet engines and components
Refiners: jet fuels
In-flight meal manufacturing
20
Product prices:
promotion, sales
MRO (maintenance, repair,
and overhaul)
Farmers and retailors:
agricultural produce and in-flight
meal ingredients
Guaranteeing the safe and fast transportation of passengers and cargoes to their respective destinations is of our
utmost priority. Our in-flight services help our passengers
enjoy a safe and convenient flight on board making MRO
operations the most important part of our ground operations in ensuring a safe flight. Furthermore, we also par-
ticipate in R&D efforts for future aircraft technologies and
rockets. Our services dismantle the physical and mental
distances, stimulating cultural exchanges and economic
development with the freedom of movement. The aviation
industry brings the world closer together and Korean Air is
proud to be part of it.
2014 SUSTAINABILITY REPORT
VALUE CHAIN
Post-flight Operation
Flight Operation
Check-in, boarding, catering service, in-flight entertainment
Airplane cleaning, waste disposal
Passenger: check-in, boarding, catering
service, in-flight entertainment
Aerospace business: R&D for
aircraft/unmanned aerial vehicles,
satellites/rockets
Cargo
21
Airplane cleaning
Waste disposal
Stakeholder Value Distribution by Korean Air
(Unit: KRW billion)
Korean Air actively practices social contribution with job creation and supplier support programs. While serving customers with its main businesses of passenger and cargo transportation,
taxation obligations are faithfully seen through ultimately contributing to the nation’s economy.
Employee
Shareholders
Tax Services
Creditors
Local communities
Suppliers
Wages 1,427.7
Fringe benefits 271.0
Dividends -
Corporate income
tax 2.6
Interest expenses 437.4
Donations 10.8
Rental 198.5 Fuel expenses 4,352.0
Manufacturing expenses 694.6 Airport maintenance1,108.8
GROWTH
FOR
EXCELLENCE
22
400 dollars
On January 1, 1914, an airplane took to the air, flying the first historical commercial
flight from St. Petersburg Port to Tampa Bay in Florida, U.S. The one and only passenger,
who won the bid for flight through an auction for USD 400, was then-mayor of St.
Petersburg. Current monetary value sees that USD 400 equivalent to what would be
now USD 9,300. It was the historical landmark investment toward a new future of faster
and safer transportation contributed by that first historical passenger on board.
23
KRW 11,712.4 billion
In 2013, Korean Air recorded KRW 11,712.4 billion in sales from transporting a total
of 23.4 million passengers and 1.45 million tons of cargo. Safe, fast-service flights and
delivery help numerous people around the world bolster the value of their businesses,
experience different cultures and better understand each other. The aviation
industry contributes economically to countless people and Korean Air is proud to be
a part of this chain of value creation.
While working hard to contribute to global
economic growth through strengthening our
sales numbers, we continuously strive to
reinforce the competitiveness of a growthpropelled aviation industry.
Key Economic Issues
24
Economic results (revenue, dividends, government grants) / Market position
(wages, procurement, recruitment) / Indirect economic benefits / Increased socially
responsible investments / Growth in global interdependence following globalization /
Acceleration of technology advancement / Intensifying market competition
Korean Air’s strategy for higher economic performance results
Realizing substantial growth through fundamental renovation and stable revenue structure
↑
Establishing
a stable revenue
structure
Enhancing
efficiency
and productivity of
enterprise resources
●
●
●
●
●
●
S
olidifying its market leadership through fleet modernization and global marketing
competencies
Securing new growth engines by developing new markets, products and services
Fortifying system-based business operation to realize profitable growth
B
olstering our network competitiveness through optimized fleet operation and scheduling
Increasing productivity with low-cost, high-efficient business model
F
urthering operation efficiency with reinforced human resources/organizational
competencies
Major Economic Achievements
Transportation (Unit: million persons/ million tons)
23.30
2011
24.28
2012
23.40
2013
1.71
2011
Passengers
Cargoes
23.40 1.45
1.54
2012
1.45
2013
Passengers
Sales (Unit: KRW billion)
Fleet Introduction/Disposal
16
12,261.7
11,712.4
2011
2012
2013
25
New Routes
2011
11,803.1
Cargoes
2 new routes
4
2012
●
8
Fleet Investment Amount (Unit: KRW billion)
2,400.6
2011
2012
2013
Busan~Nanjing
14
Incheon~Colombo/Male ●
●
2013
10
9
1,481.1
9
6
2
2011
2012
2013
1,851.0
Introduction
Disposal
GROWTH
FOR
EXCELLENCE
SUSTAINING EXCELLENCE
Korean Air’s sustainable
growth also contributes to
the growth of society
and the nation with its
economic impact.
26
KOREAN AIR
Market Overview and Outlook
CONTEXT
Economic Performance
The global air transport industry supports 58.1 million jobs worldwide and contributes USD 2.4 trillion to global gross domestic product
(GDP).* Domestically, it creates 575,800 jobs and USD 28.4 billion to
Korea’s GDP. In particular, the increased investment in SOC projects to
meet the level of increased travel and tourism demand among Asian
people is expected to conjure a deeper economic impact, while also
bringing the global community closer. As the nation’s leading airliner,
Korean Air takes pride in contributing to the development of the global
aviation industry with its profit-generating business activities. All the
while, creating jobs and contributing to the national and global GDP in
addition to distributing its profits to all stakeholders.
*S
ources: ATAG, Aviation Benefit beyond borders_2014_Apr_54p
The world’s aviation industry witnesses explosive growth in the number
of passengers every year. In fact, the 4.3 percent annual growth rate of
market demand for air transport over the five-year period from 2008
to 2012 is projected to further grow to a rate of 5.4 percent during the
next five-year period beginning from 2013. In particular, the number of
traveling passengers between the Asia-Pacific regions is predicted to
show a robust 5.7 percent annual growth rate for the same period. The
actual growth rate of international passengers rose by 5.2 percent year
on year in the Asia-Pacific region, while the international cargo transport in the same market dropped 0.6 percent for the same period. This
decline can be explained by the delayed recovery of the global economy
and sagging market demands for cargo transport. However, the market
demand for international cargo transport is forecast to start gaining
ground in 2014 when advanced economies in Europe start to recover,
boosting the import and export volumes.
On the domestic front, the number of outbound and inbound passengers edged up by 7.7 percent and 9.6 percent respectively for the same
period in 2013, ultimately translating to an overall passenger increase
of 9.2 percent. This growth rate is anticipated to continue for the time
being, thanks to improved immigration services, including visa issuance,
Brazil World Cup and Incheon Asian Games, as well as the explosive
growth in the China-destined travelers.
PROGRESS
2013 Condensed Balance Sheets
(Unit: KRW billion)
2011
2012
2013
Total Assets
20,222.5
20,678.0
20,964.3
Total Liabilities
18,036.1
18,304.3
18,693.7
2,186.4
2,373.7
2,270.6
Total Shareholders’ Equity
2014 SUSTAINABILITY REPORT
GROWTH FOR EXCELLENCE
2013 Condensed Income Statements
Sales
Gross Profit
Operating Income (loss)
Income Before Income
(Unit: KRW billion)
Fleet
Type
Incheon-Colombo/Male
Busan/Nanjing
Dec. 31, 2013
6
8
2012
2013
11,805.3
12,261.7
11,712.4
A380-800
1,599.5
1,396.0
1,105.9
B747-400
15
14
B777-300ER
10
12
4
4
Large-size Subtotal
35
38
B777-200
18
18
A330-200
7
8
A330-300
16
15
A300-600
3
2
B737-800
20
18
B737-900
20
22
394.1
277.6
(18.0)
(443.0)
396.4
(401.1)
(301.1)
259.6
(290.5)
B777-300
Passenger
New Routes in 2013
Routes
Dec. 31, 2012
2011
Taxes (loss)
Net Income (loss)
(as of the end of 2013)
Aircraft
Schedule
First Flight
A330
3 flights/week
Mar. 9, 2013
B737
4 flights/week
Jul. 12, 2013
Small-size Subtotal
Passenger Aircraft Total
B747-400F
Cargo
B747-8F
B777F
Cargo Aircraft Total
Grand Total
84
83
119
121
23
19
2
4
2
3
27
26
146
147
27
GROWTH
FOR
EXCELLENCE
SUSTAINING EXCELLENCE
KOREAN AIR
2014 Business Strategy & Key Tasks
Stakeholder Interview
Fundamental business restructuring to strengthen growth platform
28
“Korean Air is ahead of the pack in effectively
responding to major CSR trends and sustainability
issues through continuous fleet modernization and
constant management of environmental issues.
I was impressed by its bold step of adopting the new
aircraft model, A380, before any Korean airliners
and its aggressive expansion in new markets and
business fields. In that context, Korean Air commands
undisputed leadership in the market. Nonetheless, the
current issues regarding the company’s governance
and rising debts arouse prudence in its management
practices of financial and non-financial risks. Going
forward, I think Korean Air needs to further bolster
its responsiveness and willingness to take on new
challenges plus take on a more far-sighted approach
to its business strategies so that it may establish
stable business fundamentals unswayed by
temporary issues.”
↑
Profit-oriented
business
operations
●
Higher cost
competitiveness
through improved
resource
productivity
●
treamlining the organization and increasing outsourcing
S
E
nhancing the operational rate of high-efficient
machinery and quickly adopting
new equipment meeting market demand
● M
aking full use of idle cargo planes and enhancing
cost competitiveness of passenger planes
S
trengthening market anticipation and responsiveness
to customer demand
● T
aking over reins in growth engine businesses and
increasing network competitiveness
● B
uilding on business alliances and developing new
business models
●
Reinforcing core
competencies
for higher global
competitiveness
Passenger Business Strategies
Amid the skyrocketing oil prices and relentless competition in the aviation industry, Korean Air pursues stronger competitiveness and sustainable growth
according to the following business strategies for passenger transport.
●
●
Kim Min-ji
Analyst at e-Trade Securities
Improving profitability in passenger/cargo transport
operations
● Year-round cost-reduction campaigns
● C
ost structure renovation through cutback on
fixed costs
●
●
Route schedule flexibility considering difference between high and low
seasons, while increasing supply of profitable routes by assigning optimal
aircrafts to each route
Strategically utilizing top-notch aircrafts to increase sales of high-end class
seats and strengthening alliance marketing to penetrate the premium and
commercial markets
Securing sustainable growth platform with strategic development of
new markets with high growth potential; Launching of new scheduled
flights for Incheon-Colombo/Maldives and Busan-Nanjing routes in 2013
2014 SUSTAINABILITY REPORT
GROWTH FOR EXCELLENCE
(Incheon-Houston route currently in works); Pursuing new market demands through expansion of network with non-scheduled routes to capture niche markets.
Routes Operation Strategies
Identifying new market demand for business
or leisure purposes and strengthening regional
network in China and Southwest regions
● D
iversifying schedule to enhance market
competitiveness and connection between routes
●
Constant market
development and
network
improvement
Cargo Business Strategies
In cargo transport operations, we are concentrating our cargo airplanes on
profitable routes built upon our strengths of quality transport service, global
network, varied product & service line-ups while making full use of the passenger planes’ cargo transport; thus helping us secure both cost competitiveness and route profitability.
●
●
●
Proactive
response to market
changes
We currently work on improving profitability by selling new, highly profitable
products that meet customer needs, such as the cargoes for medical supplies, fresh freights and e-commerce freights.
Following the adoption of the new, high-fuel efficient cargo plane models,
namely two B747-8Fs and one B777F in 2013, one of each craft will be
launched into operation and planes beyond their peak will be taken off the
line in 2014 to enhance efficiency in our fleet operation.
Profit-oriented
routes operation
Fleet Operational Plans
●
Preemptively seizing business opportunities in the highly-potential yet exclusive, U.S. route
●
Incheon-Houston
Increasing operational rate by boosting
assignment of high-density aircrafts to longhaul routes
● Adopting use of large-sized passenger
planes in consideration of market demands
for passenger and cargo transports
●
Enhancing
efficiency in fleet
operation
New Route Plan in 2014
Route
caling down on low-demand, low-profit
S
routes
● Actively tapping into the market demand for
non-scheduled routes by utilizing idle
cargo planes
●
Penetrating into the niche market of our exclusive passenger transport
routes, we are rigorously developing new sources of revenue, such as the
routes on Xian in China, and other cities in Vietnam and Latin America. In
2014, we will take advantage of the increased traffic rights as agreed in
the Korea-China Aviation Talks in pursuit of the new opportunities in the
Chinese market.
NEXT STEP
●
Adjusting supply and scheduling to regional
market demand and/or foreign exchange
fluctuations
● Effective competition strategies in proportion
to the growing market supply for AmericaAsia routes
●
Aircraft
Schedule
First Flight
B777
7 flights/week
May 2, 2014
A total of 56 new passenger crafts (including two A380, 10 B747-8I, and 10
B787) and five new cargo crafts (three B747-8F and two B777F) are to be
initiated into the fleet between 2014 and 2019 to meet the growing market
needs for air transport.
New light-weighted, high fuel-efficient aircrafts will significantly increase
flight distance, making them optimal for long-haul routes. Out-of-date,
low-efficient aircrafts, such as A300-600 and B747-400, are slated to be
phased out.
29
PEOPLE
FOR
EXCELLENCE
30
Tony Jannus pilot
Tony Jannus was the pilot of the Benoist Airboat, the airplane that served the world’s
first scheduled airline service in 1914. After his first flight, Jannus continued piloting
this 8 meter-long airboat twice a day back and forth the first historical commercial route
between St. Petersburg and Tampa. The world’s first scheduled airline, St. PetersburgTampa Airboat Line transported 1,204 passengers with only eight days of flight
cancellation until its contract terminated three months later.
31
20,433
As of 2013, the number of Korean Air’s employees was recorded at 20,433. Every year, the company
hires 1,200 to 2,500 new employees and assists them with systematic training and education programs
to gain expertise in their respective job duties be it ground operations, engineering or part of the
cockpit and cabin crews. Greater experience led to more sophisticated and diversified services,
eventually contributing to the advancement of the global aviation industry. Employees’ expertise and
teamwork remains to be the unchanged, underlying factor to a 100-year-old aviation industry.
Committed to a higher quality of life for our
employees, we offer generous fringe benefits and
foster competent experts in the industry
throughout the globe with varied and efficient
education on top of training programs.
Key Employee Issues
32
Increased importance for inclusion of talented team members, employment, and
training & education
Our efforts toward better employee welfare and corporate culture
Seeking fundamental changes and a greater dynamic in corporate culture
● - Reinforced change management through interactive communication covering entire organization
- Training systems cultivating minds to innovate along with strong sense of responsibility in our employees
●
Varied maternity protection programs
Operating Korea’s first technology-oriented university, Jeongseok University, and
supporting employees’ life-long learning with subsidies for tuitions
● mployee communication programs: Companionship Campaign (2013) and Hanmaeum
E
Campaign (2014)
● Operating the Industrial Health and Safety Committee
● Management of health and safety indicators concerning injury rates
● Major Achievements in Employee Welfare
New Employment (Unit: persons)
2011
1,801
732
2012
769
684
Female
Male
714
470
Percentage of Female Employees
2013
714
470
Female
Per-Employee Education Hours (Unit: hours)
131 101
42.6%
Female
Male
Male
Maternity/Baby Breaks (Unit: cases)
712
1,064
1,038
2011
2012
2013
2011
2013
167
111
Occupational Injury Rate (Unit: %)
2012
125
0.08
100
Korean Air does not discriminate its employees
by gender, age, religion or regional background
and strictly abides by the local laws and regulations pertaining to the location of operation.
0.07
2013
0.06
131
101
2011
2012
2013
33
PEOPLE
FOR
EXCELLENCE
Korean Air believes
its commitment to employee
satisfaction can help job
security and upgrade the
quality of life for all.
34
SUSTAINING EXCELLENCE
KOREAN AIR
Promoting Employee Equality
CONTEXT
Business Philosophy Valuing People
Korean Air’s founder had a strong belief that a company is the sum of
its people and that a good education can inspire change in people. This
belief has been handed down for the past few decades, setting the
guidelines for employee policy, regarding recruitment, compensation,
education and training, fringe benefits and corporate culture.
Korean Air does not tolerate any form of discrimination in employment,
assignment, evaluation and compensation based on gender, age, religion, or regional background. We also comply with local laws and regulations at all our operations, domestic and overseas. We also prohibit
forced labor, child labor and any form of extortion as stipulated in the
Korean Labor Standards Act and ILO Conventions.
At Korean Air, people from various professions are working together in
ground operations, engineering, and flight operations. The different requirements coinciding with these professions result in a non-discriminate environment when it comes to the consideration of employment
or compensation by gender or employment status (regular or contractbased). In particular, we pay special attention to the well-being of female workers with our practical programs to support maternity. Additionally, we have in place a number of professional training/education
programs related to the aviation industry, helping our employees rear
their expertise in their own professions. We strongly believe this also
helps enhance the quality of life for all our employees as well.
PROGRESS
Employees by Gender and Profession
Classification
* as of Dec. 31, 2013, executives not included
Ground Operation (general
affairs/ marketing/ transportation)
Engineering (aviation, aerospace, research,
procurement, communication, and flight management)
Crews
(cockpit/cabin)
Others
(IT/catering, etc.)
Total
Total
6,424
5,272
8,327
410
20,433
Male
3,405
5,188
2,790
348
11,731
Female
3,019
84
5,537
62
8,702
2014 SUSTAINABILITY REPORT
PEOPLE FOR EXCELLENCE
Workforce Breakdown by Employment Status and Region
* As of Dec. 31, 2013, executives not included
Employment Contract
Region
Regular Contract-based
Domestic
(Male/Female) (Male/Female) (Male/Female)
Number of
18,463
employees
(10,917/7,546)
(persons)
1,970
18,062
(807/1,163) (10,549/7,513)
Overseas
Americas
Europe
Others
Subtotal
Japan (Male/ China (Male/ Southeast Asia
Female) (Male/Female) (Male/Female) (Male/Female) (Male/Female) (Male/Female)
Female)
263
(162/101)
665
(226/439)
569
(252/317)
463
(284/179)
277
(163/114)
121
(88/46)
2,371
(1,175/1,196)
Employment Status
Managers
(Male/Female)
Staff
(Male/Female)
3,755
(2,841/914)
14,708
(8,076/6,632)
Number of
employees
(persons)
35
Employee Turnover Rate
No. of new employees
* As of Dec. 31 of each year, executives not included
2011
Classification
Gender
Age
Region
Unit
2012
2013
Total workforce
New employee
Total workforce
New employee
Total workforce
New employee
Male
(persons)
11,631
732
11,732
684
11,724
470
Female
(persons)
8,903
1,801
8,902
769
8,709
714
Under 30
(persons)
5,836
2,234
5,588
1,142
5,076
933
30~39
(persons)
6,520
254
6,590
275
6,586
199
40~49
(persons)
5,721
38
5,904
25
6,089
43
Above 50
(persons)
2,457
7
2,552
11
2,682
9
Domestic
(persons)
18,236
2,100
18,127
1,062
18,322
861
Overseas
(persons)
2,298
433
2,507
391
2,111
323
PEOPLE
FOR
EXCELLENCE
SUSTAINING EXCELLENCE
KOREAN AIR
No. of Employee Severance
* As of Dec. 31 of each year, executives not included
2011
Classification
Gender
Age
36
Region
Unit
2012
2013
Total workforce
No. of employee
severance
Total workforce
No. of employee
severance
Total workforce
No. of employee
severance
Male
(persons)
11,631
404
11,732
409
11,724
402
Female
(persons)
8,903
719
8,902
807
8,709
788
Under 30
(persons)
5,836
448
5,588
543
5,076
473
30~39
(persons)
6,520
363
6,590
359
6,586
395
40~49
(persons)
5,721
182
5,904
149
6,089
148
Above 50
(persons)
2,457
130
2,552
165
2,682
174
Domestic
(persons)
18,236
741
18,127
755
18,322
730
Overseas
(persons)
2,298
382
2,507
461
2,111
460
Korean Air’s Initial Wage vs. the Minimal Wage
As known very well within the industry, Korean Air offers a significant rate
of initial wage to its employees with no discrimination based on their job
functions. Our annual pay rate sees new employees in the ground operation profession get 2.9 times higher than legal minimum wages (Korean
legal minimal wage is KRW 4,860/hour as of 2013). Apart from annual pay,
the company pays out performance-based incentives and safety incentives
based on safety performance evaluation results to encourage more dedication toward employee safety at work.
Percentage of Locally-hired Managers
Living up to its name as a globally competitive carrier, Korean Air gathers
every resource to recruit and retain a talented, global team under the notion that localization is the key to successful global expansion. Our comprehensive non-discriminate employment policy contributes to job creation
in operations overseas within local communities. Also, we actively foster
locally-hired managers with various programs to help them attain a higher
competency in their respective job professions.
Percentage of Locally-hired Managers
Category
No. of overseas employees
No. of Employees (%)
2,378 persons
Percentage of locally-hired employees
88.8%
Percentage of locally-hired managers
14.8%
* 2As of Dec. 31, 2013, no executives included
2014 SUSTAINABILITY REPORT
PEOPLE FOR EXCELLENCE
Performance Evaluation for Fair Compensation
Korean Air runs its own comprehensive, specialized evaluation system called
the KAL Performance Appraisal System (KALPAS) while each job function
has Standard Performance Indicators. We also have a separate examination
for crew members to ensure a fair and objective evaluation of their multifaceted performance on the job. The evaluation results are also reflected in
the annual pay rate and promotion review based on job function and class in
accordance with the differential compensation scale.
Competency
measurement
Achievement
measurement
Personality/
job aptitude
test
Manager
leadership
survey
Compile &
Analysis
Reflected in personnel
management
(objective/rational
discrimination)
Compensation & Fringe Benefits
Apart from its top level pay in the industry, Korean Air’s general wage spectrum is tied to the performance evaluation results. The company also ensures that its fringe benefits programs are practical to enhancing the quality
of life for all employees. Specifically, the company provides employees and
their families with airline tickets annually to help them enjoy their leisure
time and broaden their global insight. Other fringe benefit programs that
Korean Air offers to its employees include company housing, tuition support
for the children of employees, medical subsidies, support for leisure activities and post-retirement plans.
BENEFITS
Used as the basis
for human resources
development (HRD)
- Medical/Pension premium
subsidies
- Airline tickets
- Housing/
tuition supports
PAYMENT
- Job function/class
- Basic pay rate
- Annual pay scheme
Total Compensation
INCENTIVE
- Profit sharing (PS)
and productivity
incentives (PI)
- Safety incentives
37
PEOPLE
FOR
EXCELLENCE
SUSTAINING EXCELLENCE
KOREAN AIR
2013 Fringe Benefits Performance
38
Category
Description
Wages
- Fair compensation scheme
- Introduction of annual pay and performance-oriented system
Medical Support
- Offers health insurance (KRW 38.25 billion in 2013)
- Provides financial support in case an employee or his/her spouse suffers from illness, accident or death
(KRW 1,830 million was paid in 2013)
- Covers full medical expenses (over USD2,000 for overseas layover crews and employees on business trips)
Leisure Life Subsidies
- Offers 25 to 35 airline tickets per year
- Provides 265 time-share condominiums at popular resorts in Korea
- Provides preferential discount vouchers for major hotels in Korea and abroad
- Supports activities of 28 social clubs within the company
Living Subsidies
- Provides company housing to 2,237 families
- Provides home loans
- Provides employees’ children with full tuition support through middle school, high school and college
- Provides tuition for children of employees attending prominent universities abroad
- Provides school tuition and language course tuitions for children of employees dispatched to international worksites
- Provides tuition for employees attending company-designated universities/graduate schools for work-related majors
Retirement Life
Subsidies
- Subsidies to contribution to the National Pension Scheme (KRW 34.35 billion was paid in 2013)
- Provides KRW 50,000 every month in subsidies for employees’ personal pension plans (KRW 9.89 billion in 2013)
- Runs the nation’s largest corporate credit union while helping employees make equity participation in the union offering
substantial retirement pay (KRW 10.99 billion in 2013)
- contributions to the fund totaled KRW 55.13 billion in 2013
Incentives
- Business performance incentives and safety incentives
Differences in Fringe Benefits Between Regular and
Non-regular Employees
Korean Air does not discriminate against non-regular employees. The company applies equal conditions and compensation, from basic salary and
performance incentives to safety allowances and other monetary compensation. The same quality of benefits is offered to our entire workforce. However, some benefits that are based on the number of years in service, such
as personal pension premiums, insurance and loans, are applicable only to
full-time employees as these benefits come with long-term service.
Maternity Protection
In addition to the ‘baby break’ and flexible work time scheduling, Korean
Air goes one step further to maternity protection with such programs as
‘pregnancy break’ and occasional leaves for fertility treatment. The company provides childcare varying subsidies to employees with children under
the age of six and offers a child birth grant. Additionally, the Online SkyMom
class supports employees who may carry a child, undergo childbirth or be in
need of childcare.
2014 SUSTAINABILITY REPORT
PEOPLE FOR EXCELLENCE
Return to Work and Retention Rates Following Parental Leave
(Unit: cases, %)
Category
2011
2012
2013
No. of employees on maternity leaves
527
691
709
Return to work rate after maternity leaves
100
100
100
No. of employees on baby break
712
1,064
1,038
No. of employees on pregnancy leaves
231
452
476
No. of employees on parent leaves
481
612
562
One-year retention rate after
77.7
76.0
76.0
0.8
1.6
1.1
returning from baby break
Rate of male employees to female
employees on parental leaves
Cooperative Labor-Management Relationship
The promotion of harmonious labor-management relations leads Korean
Air to hold regular labor council meetings, and the company actively participates in collective bargaining, including wage negotiation. Enacting or
amending regulations that can have impact on the employees directly or
Stakeholder Interview
“As a leading global carrier, Korean Air contributes
to heightening the national brand name of Korea
around the world. We also share our business
secrets with low-cost domestic airliners as part of
our win-win partnership project. The introduction
of state-of-the-art aircrafts will further enhance
customer satisfaction and efficiency in our service
and fuel costs, while enhancing our competitive edge
in the industry. At the same time, our keen sense of
responsibility in protecting the environment for future
generations motivates us to take on a proactive
campaign. At our core, an uncompromising dedication
towards safety underscores what we do as a
company.”
indirectly sees the company organize a taskforce team with the labor union
for an open consultation for mutual, beneficial development.
Collective Agreement Coverage
(Unit: persons)
Park Myung-seok
Category
2011
2012
2013
Domestic full-time workers
16,481
16,953
17,800
Collective Agreement Coverage
12,028
12,734
13,839
73%
75%
78%
(staffs below the managerial level)
Coverage Ratio
General Manager, Operations Planning Team,
Operations Control Div. of Korean Air
39
PEOPLE
FOR
EXCELLENCE
SUSTAINING EXCELLENCE
KOREAN AIR
Human Resources Development Programs
Specialized Training Organization
Korean Air provides a number of training courses covering business management, job skills, and foreign languages for all ranks and positions as
well as specialized courses to foster invaluable, universal talent within
the company.
●
●
Human
Resources
Development
Center
Our on-and off-line courses are designed to maximize the educational experience, and we also have specialized, competency-building programs for
locally-hired employees at overseas locations.
●
●
●
anagement training
M
Online course
Service training
Passenger & Cargo
service training
Overseas training
Flight Crew Training Center
Maintenance Training Center
Cabin Crew Training Center
Shingal Training Center
Korean Air HRD System
Management Training
* CES: Communication Excellence School
Foreign
languages
Crew Chief
Promoted
Co-pilot Promotion/
Freshman
English, Japanese, Chinese, Russian
and other languages
Service Clinic Course
Service Leadership
Development Course
Service
Enhancement
Course
Service
Basic
Course
Global
Manager
Fostering
Course
Crew Chief
Course
H.Q.
Dispatch
Program
Flight
Operations
Maintenance
Company Orientation
Maintenance
supervisory
course
Airline Operations Basics
Staff
Maintenance
Advanced
CES for AM
Maintenance
Enhancement
CES for M
Cabin
Job Competency Enhancement
Courses (Mandatory Online
Courses based on Positions)
Newly-appointed
TM advanced
course
Global
Manager
Course
CES for DGM
MBA
Top-class
Advanced
Assistant
Manager
(AM)
CES* for GM
Orientation
Manager
(M)
Korean Air
Line-Manager
Development
Program (KLDP)
Cargo
Deputy General Manager
(DGM)
Airline
Management
School(AMS)
Cargo service
General
Manager
(GM)
Cargo
Advanced
Team Manager
Workshop
Cargo Enhancement
Korean Air Team Manager Development
Program (KTDP)
Passenger
Team
Manager
(TM)
Passenger
services
Executive
Seminar
Passenger
Advanced
Korean Air Executive Development
Program (KEDP)
Passenger
Enhancement
Executive
Service
Training
Global Expert
Program
Manager
Course
Korean Air
Value Program
Advanced
Course
Leadership Program
Practical Course
40
Professional Enhancement Training
2014 SUSTAINABILITY REPORT
PEOPLE FOR EXCELLENCE
Training Programs by Job Function
Reinforced Training for Locally-hired Global Employees
Ground Operation | Korean Air’s career development plan (CDP) offers job
rotations, helping employees experience diverse job functions at home and
abroad while providing adequate training sessions to bring up competitive
global leaders.
Korean Air supports its overseas branches with education and training, while
fostering regional, in-house service instructors for self-sufficiency in service training in its overseas operations. Additionally, its educational portal
site reinforced the English service, providing as many as 290 materials in
English for international employees.
Engineering | Korean Air’s specialized training programs and job rotation
helps its employees become top, industry experts in maintenance as specialized engineers and mechanics.
Cockpit Crews | Korean Air’s cutting-edge training equipment and advanced programs help employees grow into competent pilots ensuring safe
flights under all conditions.
Cabin Crews | Korean Air’s year-round mandatory service and special
training keep its cabin crews abreast of the most efficient manuals to guarantee the safety and comfort of customers.
Per-employee training hours
Male
Year
No. of trainees
Female
Per-employee No. of trainees
training hours
Per-employee
training hours
2011
11,758
111
8,907
167
2012
11,867
100
8,897
125
2013
11,724
101
8,709
131
Online Training Courses
Korean Air continues to promote its online training courses allowing employees to adjust their educational needs in accordance with their fluctuating
flight schedules at anytime. The quality educational content includes gaining job-related knowledge, enhancing service mindset, global competencies
as well as foreign language courses with a curriculum compatible with offline
training programs.
Life-long Learning Programs
Since 2000, Korean Air has been operating the nation’s first technique university, Jeongseok University, to support the life-long education of employees. Korean Air employees graduating this university are condoned with a
diploma authorized by the government and can transfer to other universities or advance to graduate schools with full tuition subsidy. The 13 classes
up until 2013 saw a total of 1,101 people receive diplomas.
Online Training Content Composition
Category
2011
2012
2013
No. of courses
648
799
862
YoY Change
+68
+151
+63
NEXT STEP
Employee Training Facilities
Korean Air continuously invests in human resources development facilities
and programs. In 2014, a new training center is slated to open with an accommodation of 300 people. The Flight Crew Training Center is also being
relocated to expand its size to 8,264.5m2 by 2016.
41
GREENING
FOR
EXCELLENCE
42
70% CO
2
Emissions Reduction Rate
Modern aircraft technology has seen a reduction in noise pollution from its take-off and landing
by 75 percent compared to the historical first jetliners in the 1950’s. The fuel efficiency
also improved by 70 percent compared to the 1960’s. The aircraft technology has continued
developing over the past few decades to birth aircrafts that are faster, larger and safer, with
minimal impact on the environment. The ultimate goal of the aviation industry is to eliminate the
emission of carbons from its operations through improved technology and SOC infrastructure.
43
About the
A380
In 2011, Korean Air became Korea’s first and the world’s sixth airliner to introduce A380 aircrafts. Through
July 2014, the company has adopted ten A380s and plans on phasing in ten more B787-9 aircrafts starting
in 2016 as part of its fleet modernization plan for high-efficient, eco-friendly aircrafts. Specifically,
A380 has successfully cut down on noise creation by 37 percent from the conventional aircrafts with only
30 to 40 percent exhaust gas emission of the conventional aircrafts. Also, the B787 aircraft bodies are
mostly made of composite materials, enhancing fuel efficiency by at least 20 percent.
While operating a systematic management
system to reduce greenhouse gas emissions and
energy consumption, we collaborate with the
global aviation industry in addressing policies
on worldwide carbon reduction.
44
Environmental Issues
Energy use / Emissions (atmospheric) / Climate change (global warming) /
Products and services (environmental impact)
Environmental Management Strategies
Effective Reduction of GHG
and Energy Use
●
●
●
C
ompliance with relevant
regulations
S
et an effective reduction target
and carry out necessary tasks
M
anage GHG emissions
focusing on business premises
Promotion of Communication
Regarding Environmental
Activities
●
●
●
A
ctive engagement with
internal/external stakeholders
C
onsistently carry out
environmental campaigns
Increase environmental
education
Promotion of Green
Management
●
●
●
S
tandardization of
environmental statistics
P
reventive emissions control
R
edefining contingency plans
Major Environmental Achievements
Energy Cost Reduction
CO2 Reduction (Unit: tCO2)
KRW 636 million
2011
2012
GHG Concentration
45
22.8
34.2
2012
87.35kg_CO2e/100RTK
2013
2013
2011
88.20kg_CO2e/100RTK
2012
420,488
Energy Use Reduction in Ground Operation
(Unit: TJ)
88.75kg_CO2e/100RTK
2011
↑
419,417
↑
385,921
32.1
2013
Global Afforestation Project (Unit: trees)
78,100
2011
79,000
2012
●
●
Kubuqi, China
Baganuur, Mongolia
1,124,980
77,190
78,880
2013
2011
10,000
2012
10,000
2013
10,000
Kubuqi, China
Baganuur, Mongolia
GREENING
FOR
EXCELLENCE
Connecting every corner
around the world, we
appreciate the value of not
only protecting but also
applying our utmost care
in minimizing any possible,
negative impact there may be
on the environment.
SUSTAINING EXCELLENCE
KOREAN AIR
CONTEXT
PROGRESS
Korean Air’s Environmental Management Policies
Korean Air Environmental Management System
The aviation industry gives priority to issues concerning jet fuel combustion for flight operation and the resultant emissions of greenhouse gases
(GHG) and various environmental regulations including the emissions
trading system (ETS) that takes effect as of 2014. In joint response with
the global aviation industry, Korean Air seeks to minimize GHG emissions
and its impact on the environment. Continuing to enhance our companywide environmental management system ensures that our proactive energy reduction campaigns prove effective in cost savings, while making
diverse endeavors to minimize environmental risks.
Marking the obtainment of the ISO14001 certificate in 1996, Korean Air
has consistently met necessary criteria. In accordance with the international environmental management system standards, we have individual
EMS departments dedicated to company-wide EMS operations in all our
business activities, including the headquarters & general division, maintenance & engineering, aircraft manufacturing and catering center.
46
Korean Air Environmental Management System
●
●
uaranteeing EMS suitability,
G
comprehensiveness and
effectiveness
ssessment of opportunity/
A
risk analysis for continued
improvement
●
Monitoring & Measuring
●
Compliance Review
●
●
Internal/External Audit
orrection and preventive
C
measures
Environmental
Policies
CEO Review
(A)
Plan
(P)
●
valuation of Environmental
E
Impact
●
Review of Legal Requirements
●
lans for Acting Upon
P
Environmental Goals
●
Roles and responsibilities
●
Eligibility/Education & Training
●
ommunication &
C
Documentization
Ceaseless
Improvement
Check
(C)
Do
(D)
2014 SUSTAINABILITY REPORT
GREENING FOR EXCELLENCE
Environmental Management System Certification
Input & Output
Certification
ISO14001
Initial Acquisition Date
December 13, 1996
Latest Renewal Date
November 17, 2011
Agency
BSI (British Standards Institution)
Coverage
All operations: Headquarters operation
(flight operations, transportation, cabin, strategic
support); maintenance; catering; aircraft
manufacturing
Resource Use (INPUT)
Fuel Consumption by Flight Operations
* Hotel operation is excluded following the
spin-off as of December 2013.
2011
(Unit: tons)
2012
2013
(%)
Jet Fuel
3,967,681
4,019,028
3,923,102
-2.39
* Amount of jet fuel used for domestic and international flight operations
Direct Energy Consumption by Ground Operations
Environmental Management System Organization
Change
Type
(Unit: GJ)
2011
2012
2013
Change
B-B
15,814
16,333
0
-100.00
B-C
262,658
263,349
243,815
-7.42
Gas/Diesel
281,864
296,657
252,705
-14.82
(%)
Chairman & CEO
Executive President & COO
Headquarters &
General
Maintenance
Aircraft
Manufacturing
Catering
Executives in
charge
Executives in
charge
Executives in
charge
Executives in
charge
Environment
& Construction
Management
Department
Executives.
Head of
Maintenance
& Engineering
Division
Head of
Aerospace
Business Division
Head of Catering
& In-Flight Sales
Division
EMS Department
EMS Department
EMS Department
EMS Department
Environment &
Construction
Management
Dept., Environment
Team
Maintenance
Planning Dept.,
Facility &
Equipment Team
Business Planning
Dept., Facility
Management Team
Catering Quality
Control Team
Boiler Kerosene
17,130
466
304
-34.76
By-product Gas No. 1
18,345
21,722
15,818
-27.18
Gasoline
11,399
11,283
10,861
-3.74
42,409
33,314
43,072
29.29
LNG
249,978
272,442
257,974
-5.31
LPG
7,339
7,485
3,901
-47.88
Total
906,936
923,051
828,450
-10.25
Jet Fuel
* Direct/indirect energy consumption amount is monitored on 44 of our
business premises and assured by authorities under the Low-Carbon Green
Growth Act (PWC (2011~2012), KMAR (2013)).
47
GREENING
FOR
EXCELLENCE
SUSTAINING EXCELLENCE
KOREAN AIR
Indirect Energy Consumption by Ground Operations
Type
2011
2012
(Unit: GJ)
2013
Change
Environmental Pollutant Emissions (OUTPUT)
GHG (Scope 1) Emissions by Flight Operations
(Unit: tons)
(%)
Electricity & Hot Water
1,248,506
1,335,734
1,292,780
-3.22
Type
2011
2012
2013
Change
CO2
12,186,003
12,662,272
12,361,107
-2.38
CH4
18
18
18
0.00
(%)
* Electricity and hot water consumption were calculated based on Scope 1
and 2 while excluding Scope 3. Boundaries are the same as those for GHGemitting operations listed in the target management system.
* Electricity and hot water consumption were monitored in accordance
with the guidelines of the Low-Carbon Green Growth Act and assured by
authorities (PWC (2011~2012), KMAR (2013)).
48
Water Use
Type
CO2e
(Unit: tons)
2011
2012
2013
Change
(%)
Total Amount of Water
Intake
Recycled Amount
Recycling Rate
1,500,600
1,514,530
1,250,341
N 2O
-17.44
387
403
393
-2.48
12,306,351
12,780,177
12,483,403
-2.32
* Greenhouse gas inventory applies Tier 2 IPCC 2006 National Greenhouse
Gas Inventory Guidelines.
* CO2e is the sum of emissions of CO2 equivalents of CH4 and N20.
GHG (Scope1) Emissions by Ground Operations
Type
2011
2012
(Unit: tons)
2013
Change
(%)
24,624
27,519
27,000
-1.89
CO2
60,315
60,960
55,532
-8.90
1.64
1.82
2.16
18.84
CH4
3.236
3.287
2.684
-18.34
N 2O
1.452
1.436
1.372
-4.45
60,833
61,474
55,536
-9.66
*T
otal amount of water intake includes the use of the water supply,
water recycling and underground water. Billing statements issued by water
suppliers allows for calculation of intake.
CO2e
*T
he recycled amount includes the amount of recycled water used at the
Gimpo Korean Air Building.
GHG (Scope2) Emissions by Ground Operations
Type
2011
2012
(Unit: tons)
2013
Change
(%)
CO2
63,912
64,723
62,643
-3.21
CH4
0.731
0.760
0.738
-2.89
N 2O
0.365
0.370
0.357
-3.51
CO2e
64,041
64,854
62,769
-3.21
2014 SUSTAINABILITY REPORT
GREENING FOR EXCELLENCE
Air Pollutant Emissions
Type
(Unit: tons)
2011
2012
2013
Change
Waste Emissions
(Unit: tons)
Type
2011
2012
2013
Change
(%)
(%)
Dusts
21
23
23
0.00
THC
16
16.19
20
23.53
Landfill
NOx
64,732
67,379
65,755
-2.41
Recycling
SOx
10
9
7
-22.22
SO2
3,843
3,977
3,900
-1.94
*A
ir pollutant emissions are the sum of the pollutants generated from flight
operations and six major sources of air pollutants: Incheon Maintenance &
Engineering Division (A), Korean Air Building at Gimpo, Engine Assembly
Line in Bucheon, Component Repair Plant in Bucheon, Seoqwipo KAL Hotel,
and Gimhae Tech Center).
*T
he amount of ozone depletory substances has not been measured since
2008 as they are of a negligible amount.
Water Pollutant Emissions
Type
2011
20.978
Total
12,209.90
13,332.65
13,982.74
5.84
743.57
868.63
641.08
-26.20
9,481.28
9,834.29
10,326.24
9.27
22,434.75
24,035.57
24,950.06
6.09
* The sum of waste amount is the amount outsourced for treatment and
disposal from January 1 to December 31, 2013.
* Waste Amount disposed of with biodegradable plastic garbage bags
is excluded.
* Jeju KAL Hotel is excluded from the sum of waste emissions starting in 2013.
Emissions Concentration
(Unit: %)
Air
Type
2011
2012
2013
Dust
24.4
24.6
23.8
THC
17.3
14.4
17.2
55.16
NOx
43.3
41.6
41.0
SOx
15.2
17.6
12.4
Type
2011
2012
2013
BOD
11.0
12.1
12.8
COD
19.4
20.2
18.7
SS
17.6
16.9
13.1
T-N
14.5
14.1
14.0
T-P
9.3
10.0
11.5
(Unit: tons)
2012
2013
Change
(%)
BOD
Incineration
25.572
39.677
COD
14.959
19.182
39.518
106.02
SS
30.189
38.904
43.436
11.65
T-N
3.434
4.722
5.282
11.86
T-P
0.570
0.745
1.000
34.23
*W
ater pollutant emissions are the sum of the pollutants generated from
wastewater effluent from the eight wastewater treatment facilities
in Korean Air Building and Catering Center in Gimpo, Limousine Service
Center, Engine Repair Plant in Bucheon, Incheon 1st Cargo Terminal,
Incheon Catering Center, Incheon Maintenance & Engineering Division
(A), and Gimhae Tech Center.
Water
* Emissions concentrations are percentage vs. legal limits.
49
GREENING
FOR
EXCELLENCE
SUSTAINING EXCELLENCE
KOREAN AIR
Climate Change and Its Impact on Aviation Industry
Committed to reducing its GHG emissions from flight operation, Korean Air has
instituted systems for more efficient management of its fuel costs accounting
for 40 percent of its operational expenses. This is essentially part of its new
eco-friendly management strategy to protect the environment by reducing
its GHG emissions.
Climate change presents both risk and opportunity to the global aviation industry. Being the main culprit to the increased frequency of natural disasters
such as typhoons and hurricanes, it results in the shutdown of airports, delayed flight schedules and even flight cancellations. The extended ground
standby duration therefore ultimately undermines the efficiency of fleet
operations, giving rise to additional costs. Decreases in passenger flights to
given destinations having been influenced by natural disasters can directly
affect our business and sales revenue as well. Moreover, regulations against
climate change also pose risks to the aviation industry.
50
On the other hand, the same climate change can also bestow a number of opportunities. The efforts to enhance fuel efficiency leads to cost savings, while
complying with GHG regulations often encourages maximum fuel efficiency
as well as strategic purchase of cheap carbon credits, which in turn boost the
company’s competitive edge in the industry. In addition, our efforts concerning the development of cutting-edge aircraft technology, introduction of the
latest operational systems and development of biofuel will also present new
opportunities for the aviation industry. In fact, the aviation industry has re-
GHG Emissions Reduction Performance
(Unit: tCO2)
2011
2012
2013
Economic Flight Procedures
150,649
144,658
136,125
Performance Enhancement
91,240
98,249
95,097
Flight Planning
119,423
156,769
156,822
Weight Management
24,609
19,741
32,443
385,921
419,417
420,488
Total
Efficient Fuel Management Strategies
mained loyal to the cutting down of their impact on the environment over the
last one hundred years. As a result, the per-seat kilometer of carbon emission
from modern airplanes is 70 percent lower than those in the 1960s and aircraft noise has been reduced by 75 percent following the commencement of
the first jets taking to the skies in the 1950s.*
*S
ources: IATA website at http://www.iata.org/pressroom/speeches/
Pages/2012-06-28-01.aspx
Cost savings
through efficient fuel
consumption
Improving the
environment
through reduced
GHG emissions
Korean Air’s GHG Management Strategies
In 2013, Korean Air consumed a total of 1,302,543,587 gallons of fuel to operate its flights over the year, emitting a total of 12.36 million tons of greenhouse
gas for the same period. The company has applied a variety of efforts to reduce its GHG emissions, including its voluntary agreement with the Korean
government and the adoption of the GHG Target Management program leading to the successful reduction of its GHG emissions by 420,000 tons in 2013
compared to the previous year.
Improving flight
efficiency through
analysis of
fuel consumption
patterns
2014 SUSTAINABILITY REPORT
GREENING FOR EXCELLENCE
Korean Air Fuel Management System
Stakeholder Interview
AIRPORT
Weight Management
Optimal loading of potable water
Increasing accuracy of estimated
payload
● Use of lighter containers
● Refraining from overload of jet fuel
●
● Weight Performance management
Using more economical ground
equipment while parking
Water-washing
inside the engines
Restoring
outward appearance of
fan blades of engines
Enhancing
fuel efficiency by installing
winglets on B737 aircrafts
Operational Management
MAINTENANCE
●
●
Flight plan ●
●
●
Correlated
Management
rations
Ope
●
Minimal use of reverse thrust while
landing
Taxiing
with single engine after landing
Optimal
flight speed in consideration
of fuel costs
Optimal
use of flaps while take-off
and landing
● formance
Per
● Flight Planning
“Reducing greenhouse gas emissions has become
a global issue, especially for the global aviation
industry. It is an issue in which a preemptive response
is essential as regulations such as the Emissions
Trading Scheme(ETS) take effect as of 2015 inviting
enormous investments and costs of eco-friendly
policies. Accordingly, we ask Korean Air to cooperate
with the Incheon International Airport Corporation in
its consistent efforts to minimize the GHG emissions
from its aircrafts. It is also recommended to adopt
the Energy Management System in order to spur
on a company-wide energy saving initiative. The
CEO’s commitment and stronger governance in the
adherence to these eco-friendly policies is critical to
the success of these measures.”
FLIGHT OPERATION
Developing nearest alternate airports and
shortcut routes
Smart
revision of fuel loading regulations
Loading
fuels based on statistics of fuel
consumption patterns
Planning
optimal flights based on the Flight
Operations Quality Assurance (FOQA)
● ●
●
●
Lee, Su-hong
FLIGHT PLANNING
Team Manager of Energy & Environment Division,
Incheon International Airport Corporation
51
GREENING
FOR
EXCELLENCE
SUSTAINING EXCELLENCE
KOREAN AIR
Aircraft Payload Control
to further curtail the GHG emissions with significantly lighter weight and bettered engine performance employing state-of-the-art materials for the fuselage and wings. Korean Air plans a total of 50 new passenger planes and five
new cargo planes by 2018.
Starting in 2013, Korean Air began applying more efficient fuel management
measures tapping into the close collaboration between the operational divisions of each business—flight operation, cabin and catering services. Each
division controls the estimation of the payloads (passengers + luggage +
freight + postal matters) of passenger and cargo planes influencing operational weight control. Extra points are given according to the accuracy in the
calculation designed for narrowing the margin of error of the payload estimate.
Scientific and Efficient Flight Planning
52
Korean Air is the first airliner taking advantage of the advanced technology
and accumulated database of FOQA (Flight Operations Quality Assurance)
and FFS (Flight Following System) in its flight planning for higher efficiency
of fuel consumption. These systems analyze the routes, altitudes, speeds and
fuel consumptions of the aircraft to accurately reflect the scientific data in
planning the flights allowing for safer, more enjoyable flights as well as improved efficiency of fuel loading.
Developing Economic Routes
Developing new routes or discovering shortcuts for existing routes also help
us reduce fuel consumption and CO2 emissions. Korean Air began operation
of the new shortcut passing through Sapporo and Eastern Gangwon for the
Incheon-western U.S. route and for the Incheon and Hokkaido region route
as of November 14, 2013. The shorter route connecting the two neighboring Northeast Asian countries of was approved by the bilateral agreement
and the support of the Korean Ministry of Land, Infrastructure and Transport
(MOLIT) after Korean Air brought the agenda before the Korea-Japan ATC
Operation Working Group Meeting. The new route shortened the flight duration by an average of four minutes per flight, saving approximately 2,000 tons
of GHG emissions annually.
Adopting High-efficient New Aircrafts
Korean Air became the first Korean airliner to adopt the highly fuel-efficient
A380 aircrafts transporting 35 percent more passengers than conventional
aircrafts, thereby reducing GHG emissions by more than 10 percent. Slated
to be delivered in 2015, the Bombardier CS300 aircraft is greatly anticipated
Production of Sharklets for A320 Series Exceeds 1,000
Stretching beyond the domain of air transport operation, Korean Air
also builds upon its reputation as a leading global aircraft component
manufacturer. Its particular focus lies on manufacturing eco-friendly
aircrafts using light-weight, strong composite materials. In February
2013, the company manufactured the 1,000th Sharklet—a component
of the wings for the A320 series that it has been supplying to the Airbus since 2012. With more than 80 percent of its parts, including the
surface, made of the cutting-edge composite materials, A320 Sharklets
are light, fortified aircrafts on top of being eco-friendly following continued improvement of fuel efficiency by more than 3.5 percent through
reducing air resistance on the wingtips. As a result, 3,600 tons of carbon
emissions are saved annually per aircraft. Korean Air aims to earn more
than KRW 400 billion from the sale of this product by 2017.
Efforts to Reduce Aircraft Noise
Aircraft Noise Regulatory Trends
The International Civil Aviation Organization (ICAO) first introduced noise
regulations in 1969 and has continuously raised the intensity of its regulations. All civil aircrafts in operation are mandated to abide by Chapter 3 standards and all aircrafts approved from 2006 should meet the criteria as provided
by Chapter 4 standards. Domestic regulations concerning noise emissions are
applied at Gimpo Airport (12 compliance offices since 2008), Gimhae Airport
(9 compliance offices since 2013), and Jeju (5 compliance offices since 2014).
Korean Air’s Aircraft Noise Level
Korean Air strives to minimize noise emissions from its aircrafts by adopting state-of-the-art aircrafts such as A380 and B747-8. According to the
ICAO’s Annex 16 provisions, aircrafts with a noise level of at least 10 EPNdB*
2014 SUSTAINABILITY REPORT
GREENING FOR EXCELLENCE
lower than Chapter 3 standards are classified as Chapter 4. All Korean Air
aircrafts satisfy the Chapter 4 standards.
Eco-friendly Features of New Aircrafts
A380
* EPNdB (Effective Perceived Noise Level in Decibels) is a unit of
measuring aircrafts’ noise level calculated by weighing in the particular
frequency perceived as excessive before adjusting it with the duration
and spontaneous variance of frequency and intensity.
Aircraft Noise Level
0
EPNdB
Chapter 3
-5
Enhanced Fuel Efficiency by Using Cutting-edge Composite Materials and
High-Performance Engines
-10
-15
747-400P
◆
737-900ER
●
737-900
A330-300 A330-200
■
747-400ERF
■
▲
◆
737-800W
(Winglet) ▲
777-200 ■
■
◆
747-400P
777-300
777-300ER
●
777F
■
●
Approximately 40 percent of fuselage and components are made of cutting-edge
carbon fibers reinforced composites and high-end metal substances.
●
Fuel consumption and noise and toxic gas emissions are reduced with the GP7270 engine.
●
Less than 3 liters of fuel are consumed, to transport one passenger 100 kilometers,
similar to that of a compact car
-20
Chapter 4
747-8F
●
-25
A380-861
▲
YEAR OF INTRODUCTION
-30
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
B787-9
Noise Abatement Departure Procedures
Committed to minimizing the noise emissions in nearby communities, Korean
Air develops various noise abatement departure procedures, including the
NADP 1* and 2* as recommended by the ICAO. Furthermore, its corporate
bylaws stipulate that all aircrafts should abide by the NADP 2 in order to minimize fuel consumption and reduce GHG emissions.
* NADP 1 is intended to provide noise reduction for noise-sensitive areas in close
proximity to the departure end of the runway. This procedure involves a reduction
in power or thrust at or above a prescribed minimum altitude (457m) and a delay
in the retraction of flaps/slats and acceleration until a prescribed maximum
altitude (914m) is attained.
* NADP 2 provides noise reduction to areas comparably distant from the departure
end of the runway. After using a prescribed thrust for the initial climb at takeoff, the aircraft retracts the flaps and reduces the thrust as it reaches the
prescribed minimum altitude (305m). Afterwards, it accelerates to a climbing
speed as soon as the aircraft reaches an altitude of 914m.
Eco-friendly, Next-generation Aircraft Employing Light-weighted Carbon
Composite Materials and Cutting-edge Engine Technology
●
More than 50 percent use of fuselage made of cutting-edge composite materials has
brought significant improvement in fuel efficiency with reduced emissions of exhaust
gas and noise.
●
The maximum distance of flight reaches as much as 15,750km with an accommodation
of 250 to 290 seats.
●
Aircrafts are equipped with a self-health monitoring system connected to computer
systems on the ground
53
GREENING
FOR
EXCELLENCE
SUSTAINING EXCELLENCE
KOREAN AIR
Local Air Quality
Multi-Collaboration with Incheon Int’l Airport Corporation on
Eco-friendly Airport
LTO NOx emissions
(Unit: tons)
2011
66,392
2012
67,316
2013
65,690
Recycling vs. Incineration/Landfill
● Recycling ● Incineration/landfill
2012
Korean Air concluded an agreement with the Incheon International
Airport Corporation (IIAC) on energy conservation and GHG emission reduction within the airport in November, 2013. In recognition
of the seriousness of the climate change and the nation’s energy
crisis, 11 operators, including Korean Air, took the opportunity to
sign up for the initiative. The signatories are recommended to take
voluntary initiatives to cut down on their energy consumption by at
least 1 percent annually and will be involved in promotion and education activities to raise the public recognition of these initiatives.
2013
54
59.1%
↑
40.9%
41.4%
Protecting Species at Risk
58.6%
Energy Saving in Ground Operation for 2013
Initiative
No. of
cases
Investments
(KRW in
millions)
GHG
reductions
(tCO2eq)
Energy
(TJ)
Saved
expenses
(KRW in
millions/year)
Replacement with
high-efficient
facilities
3
9.5
248.4
5.1
2.5
Air conditioning/
heating
temperature
9
-
812.5
17.6
393.7
Facility
improvement
2
-
105.7
2.2
3.2
Operational
innovation
11
-
467.1
7.3
236.6
Total
25
9.5
1,633.7
32.1
636.0
Korean Air faithfully abides by all related international regulations
and agreements on air cargo transportation and proactively sides
with protecting the environment. In 2013, the company announced
its decision to ban the carriage of shark fins on its cargo flights in
participation of the global initiative of protecting sharks that was
classified as a species at risk by the Convention on International
Trade in Endangered Species of Wild Fauna and Flora (CITES). Korean Air submitted the regulation of this particular ban and related
products to LAR (Live Animal Regulations) through IATA (International Air Transport Association) and will continue to participate in
various movements to protect the global ecosystem.
2014 SUSTAINABILITY REPORT
GREENING FOR EXCELLENCE
2014 CO2 reduction Goals
NEXT STEP
(단위:tCO2)
2014
2014 Environmental Management
Economic Flight
Compliance with and Preemptive Response to Environmental
Regulations
●
●
Compliance with domestic and international regulations on GHG
emissions by air industry
Performance Enhancement
Flight Planning
Weight Management
Total
136,736
88,754
154,005
27,398
406,893
Preparing preemptive responsive systems to new environmental
regulations (domestic ETS and Chemicals Control Act)
Expanding Communication on Environmental Issues
●
Expanding communication with internal/external stakeholders
●
Standardizing environmental performance indicators and continuing
with environmental protection campaigns
55
Reinforcing the Environmental Management System
●
Increasing check/measurement of pollutants
●
Reinforcing competencies of environmental department staff
●
Realigning contingency plans of responding environment-related
emergencies
Mending Fuel Management Policy and Developing GHG
Reduction Technology
2014 Environmental Campaign
●
Active R&D on new GHG reduction technologies
Annual Drawing Contest for Children
●
Information-Sharing with international organizations and meeting
international norms/standards
Korean Air hosts drawing contests for children every year on the
subject of “Drawing My Own Dream Airplane”. The seventh event
in 2014 is planned to awaken future generations to the importance
of protecting the environment. Every year, we wrap the grand
prize-winning paintings around the fuselage of our aircrafts, publicly announcing our commitment to harmony between the aviation
industry and the environment encouraging an enrichment of the
importance of human life.
VALUE
FOR
EXCELLENCE
SAFETY FIRST
56
Safety First
“Safety First” was the nickname of the first historical airplane in 1914 that flew the
first paid passenger. This speaks volume of how dedicated that first commercial airliner
was about safety—the timeless overarching value of the aviation industry.
In fact, the aviation industry has committed their energy to the safety and security
of passengers for the past 100 years and has evolved towards a more superior
standard of convenience and comfort for passenger satisfaction.
57
The First GCSI
The year 2013 marked Korean Air’s being accident-free for its fifteenth year. Furthermore, Korean
Air ranked atop the global customer satisfaction index (GCSI) for its ninth straight year and was also
named head of its class - by several CSI surveyors, including the KCSI (Korea Customer Satisfaction
Index) and KS-SQI (Korean Standard-Service Quality Index) in the same year. As such, Korean
Air holds its sights upon reaching higher level of customer satisfaction with investments in safetyrelated infrastructure, fleet modernization, VOC collection and customer service improvement.
Korean Air consistently earns several high
marks in customer satisfaction surveys
with remarkable punctual performance and
an accident-free record.
Customer Service Issues
58
Increased demand for stability of products & services / Customer health and safety /
Product and service labeling (customer satisfaction) / Diversified customer needs /
Growth in number of customers valuing health, eco-friendliness and pro-social behavior
Korean Air’s effort towards higher customer satisfaction
Operating Safety Management System (SMS)
● On-Time Rate of 99.86 percent (Average on-time rate of global carriers: 98.91 %)
● Maintaining IATA Operational Safety Audit (IOSA) certification
● Reflecting voice of customers (VOC) in management plans (approximately 60,000 VOCs annually)
● Improving quality of customer service through ‘Service Forum’
● No. 1 in aviation category of the Global Customer Satisfaction Index (GCSI) for ninth consecutive
year in 2013
● No. 1 in aviation category of the Korean Standard-Service Quality Index (KS-SQI) for second
straight year in 2013
● Operating established customer healthcare and first aid system
● Major Customer Service Achievements
Average fleet age (years)
2011
9.9
9.5
2012
9.3
2013
59
3,465 persons
3,260 persons
SAFETY
FIRST
Medical Aids to Invalid Passengers
2,805 persons
Accident-free operation for
External Survey Results of Customer Satisfaction
2011
No. 1 in NCSI and GCSI in 2011
2012
No. 1 in KS-SQI, KCSI and GCSI in 2012
2013
15 years
2011
2012
2013
No. 1 in KS-SQI, NCSI and GCSI in 2013
* NCSI: National Customer Satisfaction Index, GCSI: Global Customer Satisfaction Index, KS-SQI: Korean Standard-Service Quality Index,
KCSI: Korean Customer Satisfaction Index
VALUE
FOR
EXCELLENCE
Korean Air proudly
contributes to enhancing
the value of aviation service
and international exchange
as well as customer
satisfaction.
60
SUSTAINING EXCELLENCE
CONTEXT
What Customer Satisfaction Means to the
Aviation Industry
The aviation industry has contributed to improving the quality of life by
promoting the freedom of movement. Today, anyone can travel, do business and trade across borders by air. Accordingly, the quality of in-flight
service has grown and diversified. The number of traveling destinations
has doubled over the past decade and people either demand quicker and
smoother transits or direct flights to their final destinations.
The safe and secured transport of passengers and cargoes, the convenience and agreeability of flights and various other customer services are
basic assets of the aviation industry. Enhancing customer value, as it has
always been for the past century, leads to the evolution of not only the
aviation industry but also civilization.
The industry is thus propelled to improve systems and infrastructure to
achieve faster and more convenient, yet safer travel, connecting the
world. Korean Air is also a big proponent of this initiative.
KOREAN AIR
Korean Air’s safety policy underpins the company’s compliance with national laws, regulations and procedures as well as the preparation and
practice of safety management. Therefore, all regulations, procedures
and manuals should correspond with the company’s safety policy.
The Safety & Security Division of Korean Air reviews domestic and international recommendations and employee suggestions every two years
to maintain an up-to-date safety policy. The latest revision was made in
July 2014 to articulate the company’s responsibility and employees’ responsibility to maintaining the highest possible safety and security level
companywide, reiterating the employees’ role in company-wide safety
practices.
Safety Management Organization
The Korean Air Safety & Security Division is under the direct control
of the chief operating officer(COO) to facilitate company-wide safety
management and efficient, systematic safety control. In addition, the division’s chief executive directly reports to the COO for independent and
fact-based reporting on safety issues to head management.
Safety Committee & meeting
PROGRESS
Safety Policy
At Korean Air, safety policies reflect its
strong commitment to a safety-first
operation and the strategic direction of
a ‘first-class’ safety management. Everyone at Korean Air is on the same page
on this ‘safety-first’ policy and profusely exhibits concerted efforts toward
promoting safety practices within the
workplace while seeking excellence in its
operational system and customer service
through safety and quality-oriented, innovative corporate culture.
Presided over
by to management
Central Safety Committee
●
Deliberates on and approves master safety
plans
Executive Action Council
Operational
Division Heads
Decides regulations/procedures relating to
safety
● Decides projects and investment plans
relating to safety
●
Monthly Safety & Security Meeting
Divisional Team
Leaders
Analyzes abnormal flight operations and
develops prevention measures
● Inter-departmental cooperation to address
pending issues
●
2014 SUSTAINABILITY REPORT
VALUE FOR EXCELLENCE
Safety Management System (SMS)
Safety hazards collection
methodology
Safety hazards
Responsive Measures
- Report on outbreak of
event
- Inspection report
Preventive Measures
- Voluntary report on safety
issues
- Safety check
- Safety related surveys
Anticipatory Measures
- Operational data analysis:
FOQA
- First-hand observation
system: LINE SAFETY AUDIT
Analysis
Management
Safety hazard
assessment and risk
prioritization
Allocation
by responsibility
Documentization
Usage of safety
information
Introduction of
Safety Council
Safety trend analysis
Risk countermeasures
Safeguards
implemented
Thorough
management of
diverse safety
hazards
Safety bulletin board
Distribution of reports
Notification to
officers in charge of
safety measures
61
Risk reassessment
Seminars or workshops
Safety guarantee through feedback/ quality control/ quality assurance
Safety Management System for Safe Flight
Operation
Korean Air is establishing an advanced safety management system (SMS)
that focuses on integrated and preemptive measures. Completed in 2009,
the company-wide safety management IT system, SafeNet, underpins the
company-wide integrated safety control.
In 2013, the Action Log system was additionally developed, allowing effective
control of potential hazards that can hinder operational safety.
ISAGO (IATA Safety Audit for Ground Operations)
Korean Air satisfies the safety criteria of this program and monitors its suppliers to meet the criteria. As a member of the ISAGO Pool Advisory Group,
the company proudly contributes to the standardization of the international
safety criteria and the improvement of safety practice and operational quality
of all ground handling suppliers around the world.
●
Airlift Transportation Program of the U.S. Department of Defense
●
Safety Quality Assurance
IOSA (IATA Operational Safety Audit) Certification
Korean Air satisfies the 900 safety criteria of this safety assessment program developed by the IATA and has been renewing the certification through
the biennale renewal inspection since 2005.
●
orean Air holds this certification recognizing it as safe air carrier by the U.S.
K
Department of Defense and has been receiving renewal examinations every
two years since August 2001.
VALUE
FOR
EXCELLENCE
SUSTAINING EXCELLENCE
KOREAN AIR
Anti-terrorism at Korean Air
Voice of Customers (VOC)
Recently, terrorist attacks on aircrafts tend to set their targets on those that
can put terrorists in global spotlight. We have no way of knowing who or where
the next incident will occur. Therefore, Korean Air takes the following preventive
measures to protect its passengers and aircrafts in such critical circumstances.
●
onthly updating security information of destinations and regularly updatM
ing security checks at its service airports
●
stablishing responsive network by sharing information with local branches,
E
related departments and related national security authorities
●
eeping abreast of international security trends by attending related interK
national conventions
●
roviding security education to local staff and running drills simulating inP
flight emergencies
●
reparing manuals and security devices for responding crises in the event
P
of in-flight emergencies
62
In-flight
Emergency
Simulation
Drills
Korean Air embraces the ‘voice of the customer’ and as so, it is reflected in
major management policy. VOCs are instrumental in controlling our service
quality at the point of contact with customers. Customers can submit an email in any of the ten languages available on the global website of Korean
Air. To date, approximately 60,000 cases of compliments, complaints, suggestions or inquiries are directed to the company and each voice has been
reflected in its management policy.
Service Improvement
VOC DB
Case-by-case
handling of customer
complaints
MONITORING
Drills to prevent and respond to hijacking
Drills to respond to security risks
Drills with armed security guards on board
Our Efforts to Enhance Customer Service
Set up of the Service Standards Dept. in 2013
In 2013, Korean Air established the Service Standards Department as part of
its customer satisfaction management setting the company-wide guidelines
on all services, including reservation & ticketing, airport service, cabin & catering services. Also, it coordinates and improves the gaps and irregularities
in the quality of services among divisions so as to establish an all-encompassing companywide service.
Fact-finding and
monitoring
FEEDBACK
Follow-up
improvements to
policies and
procedures
2014 SUSTAINABILITY REPORT
VALUE FOR EXCELLENCE
VOC Case Breakdown
(Unit: cases)
Stakeholder Interview
2011
2012
2013
Change
(%)
Compliments
4,040
4,812
6,637
Complaints
3,693
4,789
4,124
-14%
Suggestions
1,489
1,051
629
-40%
44,658
50,215
48,787
-3%
4,327
4,520
1,941
-133%
58,207
65,439
62,118
-5%
Inquiries
Others
Total (YoY)
*O
thers: overlapping cases or damaged luggage reports
+38%
“Korean Air commands unparalleled competitive edge
over its domestic rivals when it comes to in-flight &
catering services. However, they are also emerging
recently with various strategic differentiations. It
seems the time has arrived for Korean Air to produce
its own growth strategies further distinguishing
itself from the pack. I would recommend maximizing
customer satisfaction through differentiating prices
according to reservation timing, or a competitivepricing policy on economy seats. Given the structural
weakness of domestic airliners, Korean Air can
take advantage of its in-house MRO technology &
infrastructure in its CSR activities, contributing
on social scale as well.”
Ryu In-chool
Director, Business Development of Daum Communication
63
VALUE
FOR
EXCELLENCE
SUSTAINING EXCELLENCE
KOREAN AIR
Service Forum
Company Webzine
Korean Air classifies all communication data with customers into categories
for integrated management. Vital complaints or suggestions to the business
are posted on the company’s bulletin board for expansive sharing ensuring
that everyone is on the same page about the quality of service. Some particular repetitive complaints are classified as tasks for improvements and become
subject of round-the-clock monitoring to analyze potential causes and solutions. This approach proved effective in improving the quality of service.
Korean Air publishes the monthly webzine, Service Bulletin, as a companywide communication organ. September 2006 marking the publishing of the
first issue eventually saw the arrival of the 138th issue in May 2014. Its wide
array of contents, ranging from the case studies on customer complaints, employees with excellent service records and introductions to the latest trend
in the service industry to service tips and tales of being out on the field guide
employees with practical tips for customer service.
Service Excellence
Service Forum
CUSTOMER
64
Significant
Complaints &
Compliments
Shared
Korean Air rewards employees showing outstanding records in customer service with the Service Excellence Award and motivates them to continue furthering their efforts. In 2013, a total of 26 employees were awarded and were
the recipients of a monetary reward.
REPLY
Customer Healthcare
VOC System
(Automated
classification by type
and reply)
Service Forum
(Bulletin Board)
nderstanding the contact
U
point of customers
● Improvement to customer
service & response
●
FEEDBACK
Improvement to
policies & procedures
Medical Support to Invalid Passengers
●
Preparedness for In-flight Emergencies
●
abin crews are trained on in-flight first aid services for effective and timely
C
responses
●
Aircrafts carry first aid kits and medical equipment
●
Round-the-clock Emergency Medical Call System (EMCS) on ground operation
Analysis of
customer needs
KOREAN AIR
roviding medical equipment and top-quality medical services, including
P
medicinal oxygen and stretchers according to medical specialists’ advice
Other In-flight Health & Safety Management
●
ntimely breathalyzer check on cockpit crews, aircraft maintenance techniU
cians, flight controllers and cabin crews
●
onitoring state of worldwide contagious diseases & mobilizing responsive
M
networks in event of an outbreak of an infectious disease
2014 SUSTAINABILITY REPORT
Fleet Age Control
Fleet age control is correlated to the quality of service as well as customer
safety. It is also critical to Korean Air’s eco-friendly operational policy. The
company has been consistently replacing its old fleets with safer and more
eco-friendly aircrafts for years. As a result, its average fleet age lowered from
9.5 years in 2012 to 9.3 years in 2013—the lowest among global airliners. The
company continues to look ahead strategically modernizing its fleet, disposing
old crafts and introducing the latest aircraft models.
Industry-Leading On-Time Performance through
Air-tight Aircraft Maintenance
Korean Air carries out in-house operations of aircraft maintenance, such as
checking aircraft before and after flights, periodical check-ups, and upgrading in-flight entertainment systems as well as renovation and painting of the
fuselages. Committed to safe flights, we strictly observe prior and post-flight,
plus periodic check-ups. We ultimately recorded an on-time performance of
99.86 percent in 2013—0.95 percentage points higher than the global average of 98.91 percent.
*O
n-time Performance (or, Dispatch Reliability) shows the reliability
of aircraft schedule adherence. It is the ratio of the number of
flights delayed due to technical faults in the total number of flights,
usually expressed as a percentage of paid flights.
The New Passenger Service System (PSS) Kicks in in 2014
Korean Air’s new passenger service system (PSS) that it has been
developing since 2011 finally became official this year. Based on the
world’s leading air travel service provider, Amadeus’ Altea system,
the new system will significantly improve the entire reservation process in addition to ticketing and travel, thereby reducing the check-in
procedures and durations, which are highly expected to allow effective analysis of customer information for improved quality of service
and effective marketing.
VALUE FOR EXCELLENCE
In-flight Meal Service—a Critical Factor to the Joy of Travel
Since its adoption of Bibimbap in 1998, Korean Air has been introducing a variety of Korean traditional dishes to the in-flight catering
menus, such as Bibim-kooksoo (spicy noodle), Samkyetang (Korean
ginseng chicken soup), Gori Komtang (ox tail soup), Kondre Rice,
Kalbijjim (beef short ribs), Dongchimi-kooksoo (cold noodle soup
made with dongchimi), and Yongyangbap (high nutrient rice). These
menus have been well-received by Koreans with a taste of home
and by international passengers as a form of health food. These attempts were highly recognized by the Mercury Awards, awarding
Korean Air the in-flight meal prize in 1998 and 2006. Furthermore,
the company offers a number of premium wines selected from the
service destinations.
NEXT STEP
Long-Term Growth Strategies in Customer Service
Reinforcing
brand image with
absolute safety
control and
premium services
Securing market
leadership and
continuously
enhancing profitability through
enhanced marketing
activities
Emerging as
privileged airliner
by 2019
65
HARMONY
FOR
EXCELLENCE
66
Partnership
The history of air transportation originated in the partnerships between the industry’s pioneers-Percival
Fansler, an entrepreneur who commercialized the aviation technologies, Thomas Benoist, an aircraft
manufacturer, and the historical first paid passenger Abram Pheil, as well as the historical first
commercial pilot Tony Jannus. Since then, the global aviation industry has worked together toward a
unified goal for the past century. Industrial insiders keep the sights ahead with concerted efforts
for a bolder and harmonious world for everyone.
67
Development of Space Rocket
The universe all around us is filled with infinite possibilities. Since its first entry into the aerospace
business 37 years ago, Korean Air has carried out aircraft designing, manufacturing, licensing (production),
performance improvement, restoration, renovation and maintenance operations in preparation for business
of the future. In fact, the company is a supplier of fuselage components to major aircraft manufacturers,
Airbus and Boeing, in addition to being a developer of unmanned aerial vehicles (UAV) and an assembler
of KSLV-I while partnering in satellite development projects and other aerospace businesses.
In the spirit of win-win partnerships
with our suppliers, Korean Air is
an ardent proponent of the Aviation
Industrial Cluster project.
Key Issues on Win-Win Partnerships & Social Contribution
68
Development of importance of securing and managing a stable supply chain /
Growth in demand for fair competition and win-win partnerships
Korean Air’s Commitment to Supporting Suppliers and Social Contribution
Supporting suppliers in competency-building programs with education and
technical sharing
● Running Internet Supplier Portal, iSP, as an established channel for communication
with suppliers
● Announcing ‘Aerospace Vision 2020’ that puts forth the size expansion of
its Tech Center for manufacturing aircraft and plans on supporting local small-size
airliners for development of local communities of Busan
● Encouraging and systemizing company-wide social contribution activities with
Korean Air’s designation as a Social Volunteer Certification Center (Nov. 26, 2013)
● Major Achievements in Mutual Growth and Social Contribution
Social Contribution Expenses (Unit: KRW)
2011
11,788,030,280
14,841,102,238
2012
10,403,759,751
2013
69
Per-employee volunteer hours
Korean Air’s Major Social Contribution Activities
2.9
2011
2.8
2012
2.1
2013
Meetings with Suppliers
●
Habitat for Humanity
●
Small-amount donation campaign
●
Pink Ribbon Campaign to fight Breast Cancer
●
Mongolia Afforestation Project
●
Sponsoring rice
●
One Company-One Village sisterhood
Sky Love Bazaar
Sponsoring Korean language service
at world’s three major museums
● Volunteer medical service by Aviation Medical Center
●
● Monthly
Monthly
Monthly
●
Inviting underprivileged children on Jeju Island vacation
●
One Company-One Troop sisterhood
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13
2011
2012
2013
HARMONY
FOR
EXCELLENCE
As a responsible corporate
citizen, Korean Air promotes
mutual partnerships and
collaborative growth along
with all its stakeholders.
70
2014 SUSTAINABILITY REPORT
KOREAN AIR
Selection and Management of Business Partners
CONTEXT
Win-Win Partnerships & Korean Air’s Supplier Policy
In a volatile business environment, consistent support and collaboration of excellent suppliers are the prerequisites to sustaining the staying
power of a business. Therefore, Korean Air applies its utmost to identify
competent suppliers and foster them in long-term partnerships through
diverse mutual growth programs enabling both sides to generate profits
and evolve from these relationships.
In principle, Korean Air selects suppliers from competitive bidding, giving advantages to those who can afford long-term partnerships based
on its total cost of ownership (TCO) methodology. We sift through the
candidates with a comprehensive review of the applicants’ ethics policies, financial conditions, HRM programs, safety & health policies, compliance with human rights and labor laws as well as certification-holdings
to finalize business partners. Once selected, suppliers become subject to
evaluation for further improvements to foster partnerships.
PROGRESS
●
Effective Communication
●
●
Systematic
Management
●
Effective
Communication
Systematic Management
Selection of Business Partners
-Reflecting CSR practices of suppliers in selection process
according to Korean Air’s procurement guidelines
●
Diverse Support
Programs
Win-Win Partnership Council (2011-present)
Operating a portal (ISP) for business partners
Regular meetings/seminars and satisfaction
surveys
Fostering Competent Suppliers
- Evaluation system, satisfaction surveys
●
Diverse Support Programs
●
●
●
Establish a win-win paradigm for mutual growth with SMEs
Promote ethical purchasing and fair trade culture
●
Cash payment in full
Raw material expenses-linked pricing system
Sale & leaseback of expensive equipment
Profit-sharing
Technical support, technical training
Supplier Evaluation Process
Master data
Evaluation
categories
Evaluation
indicators
Select suppliers to be evaluated
Selection of
suppliers to be
evaluated
Selection of
evaluators
Create evaluation scores
Qualitative
evaluation
Quantitative
evaluation
REPORTING
Analysis of
the evaluation
results
Follow-up
process
2014 SUSTAINABILITY REPORT
Aviation Industrial Cluster
At the moment, Korean Air is expanding its Tech Center in Busanhome to Korea’s aircraft assembly lines. The company is also an
ardent proponent to the Busan Municipal Government’s project to
create a collaborative complex within the Aviation Industrial Cluster.
Adding to its existing 710,000-square-meter MRO tech center, the
company is setting up a new 230,000-square-meter center that will
accommodate assembly lines for aircraft, composite materials plant,
avionics maintenance, repair and overhaul (MRO) center and international joint development center for civil aircrafts as well as an
automated logistics center. Approximately 50 companies, including
the venture service center, Aerospace Service Center, composite
material manufacturers, aircraft component & maintenance plants,
high-precision machinery processing plants, and component surface processing plants will establish shop within the neighborhood.
Korean Air offers these suppliers with exclusive order placements,
technical and financial aids to help them grow into leading global
partners to the aviation industry.
HARMONY FOR EXCELLENCE
Communication with Suppliers
Korean Air always strategizes a way to address the pending issues and grievances of suppliers. Its Internet Supplier Portal (iSP) is an established communication channel for its business partners regarding inquiries and suggestions
as well as real-time tracking of order-placement, shipment and payment.
Additionally, we have in place a technical support system for suppliers, facilitating
timely production of a higher quality of products at the most competitive cost.
Other programs for mutual growth with our suppliers include partnership
agreement signing ceremony and council, supplier support policies and satisfaction surveys. All these programs are instrumental interactive communication programs as part of our endeavors towards co-prosperity with our
suppliers through ceaseless improvement.
71
Tripling the Suppliers’ Sales through Intensive SME Support Programs
Recent findings showed that the accumulated sales of Korean Air’s tall
processing suppliers tripled over three years from KRW 13.5 billion in
2009 to KRW 53.0 billion to 2012. This can be accredited to Korean
Air’s commitment to supporting its SME partners’ competency-building
through programs such as technical support, facility and equipment
lease, and quick bill settlement. In fact, Korean Air holds monthly meetings with the on-site foremen of suppliers to listen to their voices. In
2013, the company improved the payment conditions to settling purchase bills in cash within 10 days of issuance. The previous conditions
had allowed a 60-day grace period. Korean Air also leased the process
and facilities required for receiving orders from major companies, like
Boeing and Airbus.
Major Win-Win Partnership Programs and Performance
As of 2013, the number of Korean Air’s suppliers count 640. In adoption of the
Fair Trade Agreement as recommended by the Korea’s Fair Trade Commission
(FTC) in 2013, the company signed agreements with its aircraft manufacturing suppliers on fair transaction and mutual growth. Additionally, Korean Air
is adopting the four guidelines as recommended by the FTC, including the
guidelines for signing agreement between large corporations and SMEs on
win-win partnerships, and running a report center for unsound transactions.
In the future, Korean Air will continue developing more mutual-growth programs in order to establish a mutually beneficial business paradigm for both
large corporations and SMEs.
HARMONY
FOR
EXCELLENCE
SUSTAINING EXCELLENCE
KOREAN AIR
Major Win-Win Partnership Programs
●
ash payment of purchase bills: contributing to suppliers’ liquidity through
C
payment in full cash
●
aw material expense-linked pricing policy: pegging the volatile commodity
R
prices and foreign exchange rates to suppliers’ prices
●
ale & leaseback of expensive equipment: purchasing and leasing back
S
expensive equipment to suppliers
●
Profit-sharing: joint technology R&D and sharing profits with suppliers
●
uality symposiums: hosting joint symposiums with Boeing aircraft manuQ
facturer
Supporting Suppliers
72
●
ducation & training for suppliers’ employees: job training in support of
E
suppliers’ quality control competencies and technical competencies
●
echnical support to suppliers: supporting suppliers in timely production
T
and quality control
●
echnician support to suppliers: dispatching skilled technicians to suppliers
T
and supporting round-the-clock monitoring
●
rivileged long-term contracting with excellent partners: supporting them
P
for sustainable growth through long-term contracts or continued extension
of contracts
Stakeholder Interview
“As the nation’s leading premium air carrier, Korean
Air is highly expected to mobilize all its available
resources to provide a higher quality of service and
its suppliers are also expected to follow in suit. In the
same context, all Korean Air employees are required
to maintain a service mindset to meet customer needs
for a greater standard on safety and convenience.
In this regard, I believe the company can see an
appreciation in corporate value based on enhanced
trust and will be able to achieve sustainable growth
once being able to draw a clear line among roles and
responsibilities between its own and its suppliers’
employees under the shared goal of trust-building
and top-quality customer service.”
NEXT STEP
Korean Air’s Mutual Growth Strategies
Mutual cooperation with suppliers
Kim Young-ho
Management Director at Korea Airport Service (KAS)
Educational
support & HRD
Joint technology
R&D and
profit-sharing
Active
communication
2014 SUSTAINABILITY REPORT
Giving back to
society, Korean Air
is creating
shared value.
HARMONY FOR EXCELLENCE
CONTEXT
PROGRESS
Social Contribution Activities at Korean Air
Korean Air’s Social Contribution Philosophy
Departing from the old-fashioned monetary support or occasional volunteer
services of employees, corporate social responsibilities have evolved into
more comprehensive, creating shared value (CSV) activities benefitting both
the company and all its stakeholders by proactively addressing social issues.
Against this backdrop, Korean Air has consistently developed and participated
in diverse social contribution activities maximizing the shared value, thereby
helping reinforce its future growth potential and promote social values at the
same time.
Remaining vigilant to various social issues, Korean Air actively gets involved in a
number of social service programs and encourages the partaking of its employees and customers. Social Service Office Steering Committee systematically
supports employees’ volunteer activities. At the moment, there are 23 volunteer
corps, where approximately 4,000 of our employees are active members. Since
2003, each of our employees have donated a small fraction of their monthly pay
to a communal fund, where the company makes donations in matching grant.
Total funding amounted to KRW 1.7 billion as of the end of 2013.
73
Education
●
●
●
Inha Academic Institute: Inha
University, Inha Technical College, Inha
Middle & High Schools attached to
Inha University’s College of Education
Jeongseok Academic Institute: Korea
Aerospace University, Jeongseok
Aviation Technical High School,
Jeongseok University
Sports Sponsorships
●
●
Sponsorship of international sporting events
Sponsorship of sports players (Excellence
Program)
Sharing Management
Volunteering
●
Small donation campaign
●
Sky Love Bazaar
Habitat for Humanity
●
Korean Air Table Tennis Team
●
●
Korean Air Jumbos Pro Volleyball Team
●
●
Korea’s first Men’s Speed Skating Team
●
Global industrial-academic cooperation
Pink Ribbon Campaign to
fight breast cancer
One Company-One
Village sisterhood
●
Rice donation
●
In-house volunteer corps
Disaster Relief
●
Cultural Sponsorhips
●
Sponsoring Korean language service
at world’s three major museums
Green Management
●
●
Korean On-Air program
●
●
Flying Art Ambassador
●
●
Korean traditional dishes in catering
service
●
Korean Air Green Ecological Zone at Kubuqi
Desert, China
Korean Air Forest in Baganuur, Mongolia
Participation in ‘eco-city’ development
project in Songdo New Town
Distribution of saplings on Tree-Planting Day
●
Transporting disaster
relief items
Disaster relief activities
HARMONY
FOR
EXCELLENCE
SUSTAINING EXCELLENCE
KOREAN AIR
2013 Major Social Contribution Activities
74
Investing in the Next Generation
Protecting the Environment
Korean Air invites children to directly take in on-site business operations and
provides English classes to the students of Yongyoo Elementary School in
Incheon. In addition to its donations to various education programs, the company operates special programs for juveniles. On the global front, we made a
commitment worth USD 200,000 to UNOSDP YLC program helping youth in
underdeveloped countries. We also donated libraries and computer labs to underprivileged communities in China and Mongolia.
Our signature environmental protection campaigns, such as the Afforestation
Projects in Baganuur of Mongolia and Kubuqi of China are only the tip of the
iceberg when it comes to Korean Air’s active engagement in the environmental
clean-up of an expanding Incheon and attracting tourism of Jeju’s popular Noggome Oreum (hill). Additionally, we distributed gardening kits to customers on
Arbor Day and mounted on a campaign to raise public awareness of protecting
the environment.
Fertilizing Cultural Activities
Sharing with the Underprivileged
Korean Air sponsors a number of cultural, artistic and sports activities in Korea
ranging from the company holding New Year’s music concerts every year, female
ex-flight attendants’ club KASA CHORUS giving special concerts on Disability Day, the company sponsoring the Heojun Cultural Festival, and the holding
of a number of cultural exhibitions and performances for the culturally underprivileged. In 2013, the company-selected rhythmic gymnast, Son Yeon-jae, and
sculptor and installation artist, Suh Do-ho, were selected as beneficiaries of the
year for its sports and cultural sponsorship program, Excellent Program.
All Korean Air employees chip in to the Small Donation Campaign to raise funds
for supporting the underprivileged. And the 23 in-house volunteer corps,
including Gonihoe and Seungwoohoe, volunteered hours to help those in need.
In 2013, we donated KRW 3.0 billion to the Community Chest of Korea and
helped the underprivileged at social charities while also participating in the
Habitat for Humanity.
2014 SUSTAINABILITY REPORT
HARMONY FOR EXCELLENCE
Employees’ Volunteer Participation
Stakeholder Interview
Annually
23
Person-year
groups
4,129
NEXT STEP
2014 Plans for Social Contribution Activities
Volunteer Activities Certification
●
orean Air was designated as the certification authority of social service,
K
motivating more active participation and enabling systematic management of volunteer activities
“Amid the global aviation market’s rapidly changing,
the aviation industry is sustaining growth. As the
nation’s leading air carrier, Korean Air is responsive
to various economic and environmental issues and
has to be able to anticipate and address business
issues with creative corporate culture and responsible
decision-making to prepare for its future challenges.
At the same time, its domestic leading position as an
air carrier calls for its taking initiative in meeting to
the pending technological issues, such as aviation bio
fuel and aviation safety operational technology that
its domestic rivals have yet to effectively prepare for.
In the meantime, the company is required to fulfill its
corporate, social responsibilities as a leading global
airliner.”
Enhanced Promotion and Communication on Volunteering
●
nhancing public promotion and communication by promoting Volunteer
E
Corps CIs and publishing webzines
Social Contribution Events Celebrating 45th Anniversary
●
olding various special events, including special bazaars, inviting youth
H
to the company and special trips to Jeju
●
osting company-wide campaigns and global volunteer activities in link
H
with the 2014 Harmony Campaign
Encouraging Diversified Company-wide Volunteer Activities
●
Developing diverse places and programs for volunteer activities
●
artnering with NGOs for more systematic and long-term approach to
P
volunteer activities
Park Jin-suh
Researcher at the Aviation Policy & Technology Research Division,
Korea Transport Institute
75
76
APPENDIX
77
78
79
85
UN Global Compact
Awards and Associations
GRI Index
Third Party Assurance Statement
UN Global Compact
2014 SUSTAINABILITY REPORT
UN GLOBAL COMPACT
The UN Global Compact is a strategic policy initiative for businesses
that are committed to aligning their operations and strategies through
ten principles related to the areas of human rights, labor, environment,
and anti-corruption. Korean Air joined the UN Global Compact in July
2007, believing that the core values of the Compact are in line with the
Company’s commitment to business ethics, transparent management
and corporate social responsibility. Korean Air will continue to embrace
and support the ten universally accepted principles of the UN Global
Compact as listed below.
APPENDIX
Compliance with the UN Global Compact at Korean Air
Area
Principles
Human
Rights
1. We support and respect the protection of
internationally proclaimed human rights.
2. We make sure that we are not complicit in
human rights abuse.
Labor
PRINCIPLES
Principle 1. We support and respect the protection of internationally
proclaimed human rights.
Principle 2. We make sure that we are not complicit in human rights abuse.
Principle 3. We uphold the freedom of association and the effective
recognition of the right to collective bargaining.
Environment
Principle 4. We uphold the elimination of all forms of forced and
compulsory labor.
Principle 6. We uphold the elimination of discrimination in respect of
employment and occupation.
Principle 7. We support a precautionary approach to environmental
challenges.
Principle 8. We undertake initiatives to promote greater environmental
responsibility.
Principle 9. We encourage the development and diffusion of
environmentally friendly technologies.
ANTI-CORRUPTION
Principle 10. We work against corruption in all its forms, including
extortion and bribery.
●
●
5. We uphold the effective abolition of child labor.
●
6. We uphold the elimination of discrimination
in respect of employment and occupation.
●
7. We support a precautionary approach to
environmental challenges.
●
8. We undertake initiatives to promote greater
environmental responsibility.
●
9. We encourage the development and
diffusion of environmentally friendly
technologies.
Principle 5. We uphold the effective abolition of child labor.
ENVIRONMENT
●
4. We uphold the elimination of all forms of
forced and compulsory labor.
HUMAN RIGHTS
LABOR
3. We uphold the freedom of association
and the effective recognition of the right to
collective bargaining.
●
AntiCorruption
10. We work against corruption in all its forms,
including extortion and bribery.
●
●
●
KAL Activities
Reported
Page
C
ompliance with the UN Global Compact ten
principles and International Labor Organization
Conventions
3, 14~15, 34
T
raining on business ethics and sexual harassment
prevention
U
pholding the freedom of association and
collective bargaining rights
34, 40~50
N
o forced labor or child labor under stipulations as
provided in the Korean Labor Standards Act and
the ILO Conventions. No case of such violations.
77
Increasing female and disability employment
H
iring international talent without discrimination
based on nationality, culture, or religion
S
trict compliance with GHG emissions regulations
at all our business premises
52~64
C
ompany-wide ISO 14001 certification
G
HG Inventory System & GHG emissions
reduction initiatives
A
dopting cutting-edge, eco-friendly aircrafts and
engines with higher fuel efficiency and less noise
emissions
P
roclamation of the Ethics Charter and compliance
with the ten principles of the UN Global Compact
●
A
nti-corruption education
●
W
histleblowing program
●
F
air trade voluntary compliance program
●
Implementing compliance support programs
3, 14~15
Awards
and Associations
SUSTAINING EXCELLENCE
KOREAN AIR
2013 Awards
Associations and Memberships
Category
Awards
Organizations
Dates
Category
Association
Economy
World’s Best Business Class Airliner
Oriental Morning Post
Jan. 9, 2013
Aviation
International Air Transport Association (IATA), Association
Asia’s Best Airliner
Voyage
Jan. 15, 2013
of Asia Pacific Airlines (AAPA), SkyTeam, Korea Civil Aviation
2013 The Most Trusted Brand Chosen by Consumers
Digital Chosun Daily
Jan. 17, 2013
Development Association, Federation of Korea Aeronautics,
2013 Best Brand Chosen by Consumers
Forbes Korea
Jan. 23, 2013
Korea Aeronautical Engineers Association, Korean Society for
Best Airliner
Travel & Leisure
Jan. 24, 2013
Aeronautical & Space Sciences, Korean Association of Air and
2013 Asia-Pacific Airline Retail Awards Best Airline for
Inflight Retail
Airline Retail Conference
Feb. 26, 2013
Space Law, Aviation Management Society of Korea
2013 Korea Brand Power Index (K-BPI)
Korea Management Association Consulting
Mar. 5, 2013
2013 Korea Brand Star
Brand Stock
Mar. 12, 2013
Chamber of Commerce and Industry (KCCI), The Federation
Internet, billboard and newspaper categories at the 21st
Consumers’ Choice of Ad Awards
Korea Advertisers Association
Mar. 28, 2013
for Korean Industries, Korea Economic Research Institute,
2013 National Brand Awards
JoongAng Daily, National Brand Awards
Nomination Committee
Apr. 3, 2013
Billboard Advertising of the Year at the 20th Ad of the
Year Awards
Korea Advertising Society
Apr. 5, 2013
Best online service provider at the 2013 DFNI Asia/Pacific
Awards
Duty Free News International
May 14, 2013
Ranked 1st of the air passenger transport service at the
Global Customer Satisfaction Index (GCSI)
Japan Management Association Consulting
Jun. 27, 2013
Ranked 1st among domestic airliners at the Korean Standards’ Service Quality Index (KS-SQI)
Korean Standards Association
Jun. 27, 2013
Ranked 1st in the Korea Customer Satisfaction Index (KCSI)
Korea Management Association Consulting
Sep. 30, 2013
Top 3 international airlines in China at the 2013 Beautiful
China Xinhuanet Travel Awards
XINHUANET
Dec. 22, 2013
Best Airline in Asia, Best A380 Layout
Premier Traveler
Dec. 30, 2013
Seoul International Forum, Korean Business Council for
Best Airliner in the area of social contribution at the 2012
Beijing Evening News Travel Trends Awards
Beijing Evening News
Jan. 17, 2013
the Arts, Korea Management Association, Takamadonomiya
2012 Social Contribution Project Award
The 3rd China Charity Festival
Jan. 23, 2013
Best HRD Award
Korea HRD Industry Association
Mar. 19, 2013
Pathfinder Supplier of the Year 2012
The Boeing company
Apr. 18, 2013
Seven-Star Airline for Safety and Product
Airlineratings.com
Jun. 11, 2013
Ranked 1st in the airlines category of the 2013 Korean
Sustainability Index (KSI)
Korean Standards Association
Oct. 16, 2013
Sustainable Product Liability Index
Journalists Association of Korea
Nov. 22, 2013
78
Society
Environment
Economy
Korea Business Council for Sustainable Development,
Business Institute for Sustainable Development of Korea
Korea Employers Federation, Korea Chamber of Commerce
and Industry, The Federation of Economic Organizations,
Korea-Japan Economic Association, Korea Listed Companies
Association, Korea Exchange, Korea Customs Logistics
Association, International Management Institute, Korea
International Trade Association, Korea-U.S. Economic Council
Environment
Green Company, Business Council for Green Growth, Gangseo
Business Group for Environmental Practices, Voluntary
Agreement of the Aviation Industry on GHG Reductions
Society
Nanum Korea, Korean Council on the Protection of Personal
Information, Korea Forum for Progress, Asia Society Korea
Center, Korea-Mongolia Forum, Visit USA Committee Korea,
Memorial Foundation, Korea Support Committee for the
International Vaccine Institute
GRI Index
2014 SUSTAINABILITY REPORT
APPENDIX
Pages
Third party assurance
2-3
85-86
16-17
85-86
4-7
85-86
4-7
85-86
4-7
85-86
8-9
85-86
12-13
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8-9
85-86
4-7
85-86
34-36
85-86
39
85-86
20-21
85-86
About this report
85-86
16-17
85-86
77
85-86
78
85-86
About this report
85-86
79
SUSTAINING EXCELLENCE
Indicators
KOREAN AIR
Descriptions
Pages
Third party assurance
18-19
85-86
Identified Material Aspects and Boundaries
G4-18
A. Process for defining report content and Aspect Boundaries
B. Explanation on how organization has implemented Reporting Principles for Defining Report Content
G4-19
List of all material Aspects identified in process for defining report content
GRI Index
85-86
G4-20
For each material Aspect, Aspect Boundary within organization are as follows: - Clarification of relevancy of Aspect material within organization
- If Aspect is not material for all entities within the organization (as described in G4-17), select one of following two approaches and report either:
a. List of entities or groups of entities included in G4-17 for which Aspect is not material
b. List of entities or groups of entities included in G-4-17 for which Aspects are material
- Any specific limitation regarding Aspect Boundary within organization
GRI Index
85-86
G4-21
For each material Aspect, Aspect Boundary outside the organization is as follows:
- Clarification of relevancy of Aspect material outside of organization
- If Aspect is material outside of organization, identify entities, groups of entities or elements for which Aspect is material and
describe geographical location where Aspect is material for entities identified
- Any specific limitation regarding Aspect Boundary outside organization
GRI Index
85-86
G4-22
Effect of any reiteration of information provided in previous reports and reasons for such reiteration
G4-23
Significant changes from previous reporting periods in Scope and Aspect Boundaries
80
Not applicable
85-86
About this report
85-86
Stakeholder Engagement
G4-24
List of stakeholder groups engaged by organization
21
85-86
G4-25
Basis for identification and selection of stakeholders with whom to engage
18
85-86
G4-26
Organization’s approach to stakeholder engagement, including frequency of engagement by type and by stakeholder group
18
85-86
G4-27
Key topics and concerns that have been raised through stakeholder engagement and organization’s response, including its reporting.
Report stakeholder groups raising each key topic and concern.
19
85-86
G4-28
Reporting period (such as fiscal or calendar year) for information provided
About this report
85-86
G4-29
Date of most recent previous report (if any)
About this report
85-86
G4-30
Reporting cycle (such as annual, biennial)
About this report
85-86
G4-31
Provide contact point for questions regarding report or its contents
About this report
85-86
G4-32
A. ‘in accordance’ option chosen by organization B. Report GRI Content Index for chosen option
C. Report reference to External Assurance Report if report has been externally assured. GRI recommends use of external assurance, but it is not required
to be ‘in accordance’ with Guidelines.
About this report
85-86
G4-33
A. Organization’s policy and current practice with regard to seeking external assurance for report
B. If not included in assurance report accompanying sustainability report, report scope and basis of any external assurance provided.
C. Relationship between organization and assurance providers
D. Clarification of involvement of highest governance body or senior executives in seeking assurance for organization’s sustainability report.
About this report,
85-86
85-86
Report Profile
2014 SUSTAINABILITY REPORT
Indicators
Descriptions
APPENDIX
Pages
Third party assurance
G4-34
13
85-86
G4-35
13
85-86
G4-36
13
85-86
G4-37
13
85-86
G4-38
12
85-86
81
G4-39
12
85-86
G4-40
12-13
85-86
G4-41
13
85-86
G4-42
12-13
85-86
G4-43
13
85-86
G4-44
13
85-86
G4-45
16-17
85-86
SUSTAINING EXCELLENCE
Indicators
KOREAN AIR
Descriptions
Pages
Third party assurance
Governance
82
G4-46
Highest governance body’s role in reviewing the effectiveness of organization’s risk management processes for economic, environmental and social topics
16-17
85-86
G4-47
Frequency of highest governance body’s review of economic, environmental and social impacts, risks, and opportunities
13
85-86
G4-48
Highest committee or position that formally reviews and approves organization’s sustainability report and ensures that all material Aspects are covered
13
85-86
G4-49
Process for communicating critical concerns to highest governance body
13
85-86
G4-50
Nature and total number of critical concerns communicated to highest governance body and mechanism(s) used to address and resolve them
13
85-86
G4-51
A. Remuneration policies for highest governance body and senior executives for following types of remuneration:
- Fixed pay and variable pay:
a. Performance-based pay b. Equity-based pay
c. Bonuses
d. Deferred or vested shares
- Sing-on bonuses or recruitment incentive payments
- Termination payments - Clawbacks
- Retirement benefits including difference between benefit schemes and contribution rates for highest governance body, senior executives,
and all other employees
B. Clarification of performance criteria in remuneration policy related to highest governance body’s and senior executives’ economic, environmental and social
objectives
13
85-86
G4-52
Process for determining remuneration; Clarification of remuneration consultants being involved in determining remuneration and their independence of
management; report any other relationships which remuneration consultants have with organization.
13
85-86
G4-53
Clarification of stakeholders’ views sought and taken into account regarding remuneration, including results of votes on remuneration policies and proposals,
if applicable
13
85-86
G4-54
Ratio of annual total compensation for organization’s highest-paid individual in each country of significant operations to median annual total compensation for
all employees (excluding the highest-paid individual) in same country
13
85-86
G4-55
Ratio of percentage increase in annual total compensation for organization’s highest-paid individual in each country of significant operations to median
percentage increase in annual total compensation for all employees (excluding the highest-paid individual) in same country.
-
Undisclosable due to
corporate policy
G4-56
Organization’s values, principles, standards and norms of behavior such as codes of conduct and codes of ethics
14-15
85-86
G4-57
I Internal and external mechanisms for seeking advice on ethical and lawful behavior, and matters related to organizational integrity, such as helplines or advice lines
15
85-86
G4-58
I Internal and external mechanisms for reporting concerns about unethical or unlawful behavior, and matters related to organizational integrity, such as
escalation through line management, whistleblowing mechanisms or hotlines.
15
85-86
Ethics and Integrity
2014 SUSTAINABILITY REPORT
Material Aspects
Boundary
Within
Economic
Performance
Market Position
Indirect Economic
Impacts
Outside
DMA and Indicators
APPENDIX
Pages
Third party assurance
21
85-86
50
85-86
-
Unsubscribed to a corporate
pension service
N/A
Not applicable
36
85-86
36
85-86
Economy
71
85-86
26
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47
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47
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47
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45, 54
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47
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48
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Aspects
Energy
Emissions
Products & Services
48
85-86
-
Not managed currently
45
85-86
50
85-86
48
85-86
48
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51-52
85-86
54
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SUSTAINING EXCELLENCE
Material Aspects
Aspects
Boundary
Within
KOREAN AIR
DMA and Indicators
Pages
Third party assurance
Society경제
Outside
Labor Practices and Decent Work
Employment
Training and Education
●
●
G4-LA1
Total number and rates of new employee hires and employee turnover by age group, gender and region
34-35
85-86
G4-LA2
Benefits provided to full-time employees not provided to temporary or part-time employees, by significant locations
of operation
37-38
85-86
G4-LA3
Return to work and retention rates according to maternal or paternal leave
39
85-86
G4-LA9
Average hours of training per year per employee by gender and by employee category
41
85-86
G4-LA10
Programs for skills management and lifelong learning that support continued employability of employees and assist
them in managing career endings
41
85-86
G4-LA11
Percentage of employees receiving regular performance and career development reviews by gender and by employee
category
40-41
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G4-PR1
Percentage of significant product and service categories for which health and safety impacts are assessed for improvement
61
85-86
G4-PR2
Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety
impacts of products and services during their life cycle, by type of outcomes
-
Undisclosable due to
corporate policy
G4-PR3
Type of product and service information required by organization’s procedures for product and service information
and labeling, and percentage of significant product and service categories subject to such information requirements
N/A
Not applicable
G4-PR4
Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service
information and labeling, by type of outcomes
G4-PR5
Results of surveys measuring customer satisfaction
84
Product Responsibility
Customer Health &
Safety
Products & Service
Labeling
●
●
N/A
62-63
Not applicable
85-86
Third-party
Assurance Statement
2014 SUSTAINABILITY REPORT
APPENDIX
Dear Korean Air Management and Stakeholders
Introduction
The Korean Standards Association (“KSA”, the assurance provider) was commissioned
by Korean Air to perform a third-party Assurance Engagement of the 2014 Korean Air
Sustainability Report (the “Report”). The KSA presents the following independent opinions based on its assessment of the feasibility of the data contained in this Report. Korean Air has sole responsibility for the contents and performance reviewed in this Report.
Independence
As an independent assurance agency, the KSA does not have any kind of commercial
interest in the businesses of Korean Air other than its responsibility for undertaking
third-party assurance of the Report. We have no other contract with Korean Air that
may undermine our credibility and integrity as an independent assurance agency.
Assurance Standards and Level
This Assurance Engagement follows the AA1000AS (2008) assurance standards to
provide Moderate Level assurance. We have checked the three principles of ‘inclusivity’,
‘materiality’, and ‘responsiveness’ in combination with the information credibility of the
Report. We have also verified whether the content of the Report was created in accordance with the GRI G4 Guidelines and ISO 26000.
Assurance Type and Scope
We have performed a Type 2 Assurance Engagement in accordance with AA1000AS.
This means that we have verified the accuracy and quality of the statements made by
Korean Air and the sustainability performance data included in this Report. This Assurance Engagement covers data from the calendar year 2013. Information from the first
half of 2014 has also been included, depending on the content.
The scope of this Assurance Engagement primarily covers the systems and initiatives
undertaken by Korean Air, including its sustainability management policies, goals, projects, standards and performance during the reporting period defined in the Report.
While the company’s environmental and social data, as well as its financial data, have
been verified, the scope of the review concerning stakeholder engagement is limited to
the materiality test process.
Assurance Methods
The KSA collected information, data or evidential materials within the specified scope of
assurance, using the following methods:
• Analyses of articles related to Korean Air’s sustainability management published by
domestic media outlets over the last three years
• Analyses of issues reported in the sustainability reports published by domestic and
overseas industry peers
• Visits to Korean Air headquarters/Interviews with employees in charge of sustainability management and managers of respective issues
• Verification of the management system and process to improve achievement in sustainability management and to prepare the Report
• Review of consistency between the financial performance data and the company's ‧
audit report/publicly announced data
• Examination of internal documents and other basic materials
Assurance Results and Opinions
[At the assurance principle/process perspective]
The KSA has reviewed the draft version of this Report in order to present our opinions
as an assurance provider. Modifications were made to the content of the Report when
deemed necessary. We have not detected any significant errors or inappropriate descriptions in this Report as a result of our Assurance Engagement. As such, we present
our opinion of the 2014 Korean Air Sustainability Report as follows.
Inclusivity
- Has Korean Air engaged its stakeholders in strategically responding to sustainability?
We believe that Korean Air is making an all-out effort to encourage major stakeholders’
participation in promoting sustainability management, and we have assured the procurement and operation of diverse stakeholder communication channels. We are not
aware of any omission of significant stakeholder groups. However, as only a limited ratio
of internal and external stakeholders responded in view of the population groups, our
judgment is apparently based on the collection of a limited number of opinions gathered
from among the stakeholder groups. In the future, therefore, a substantial supplement
will be required to collect opinions from diverse internal and external stakeholders.
Materiality
- Has Korean Air included material information in the Report to help stakeholders make
informed decisions?
We are not aware of any significant omissions or exclusions of data that are material
to stakeholders. We have verified that Korean Air conducted the materiality test with
issues identified in analyses of internal and external environments, and reported according to the result. In particular, it is highly evaluated that key issues were derived by
actively reflecting the opinions of the representative stakeholders of important groups
in the materiality test. It is recommended that, in the future, the process by which the
85
SUSTAINING EXCELLENCE
KOREAN AIR
details of the report are defined and determined should be disclosed in greater detail
along with the data concerning the status of responses of the stakeholders.
vironment, including a decrease in sales accompanied by the decrease in the transport
of passengers and cargo volumes as a result of the persisting business depression. In
particular, its strategic approach to gradually increasing the ratio of high-efficiency
equipment while decreasing its low-efficiency equipment seems highly conspicuous. It
is further recommended that Korean Air should pursue solutions while steadily responding to its still relatively heavy debt ratio.
Responsiveness
- Has Korean Air appropriately responded to stakeholder requirements and interest in
this Report?
We have verified that Korean Air has responded to stakeholders’ needs and interests by
reflecting stakeholders’ opinions in the Report. We are not aware of any evidence that
Korean Air’s response to significant issues of stakeholders has been reported inappropriately. It is recommended that, in the future, a management scheme should be further
solidified whereby Plan, Do, Check and Action (PDCA) are steadily performed for all
important issues in conjunction with GRI G4 DMA.
Review of GRI G4 Compliance and Verification by Indicator
86
We confirm that this Report has been prepared in accordance with the GRI G4 Comprehensive Option. Based on the data provided by Korean Air, we can also confirm the
validity of the contents related to General Standard Disclosure and Specific Standard
Disclosure indicators.
Environmental
The high price of oil and climate change are critical environmental issues, which act as
significant risks to businesses. Korean Air has promoted a policy for maintaining its fuel
control scheme and reducing greenhouse gas emissions based on its internal environmental management system. Its overseas forestation projects, which the company has
steadily implemented along with its schemes for controlling fuel and greenhouse gas,
also seem to be exemplary. However, it is recommended that it should perform a ‘quantitative indicator management’ of its environmental management system and ‘QA/QC
programs required for data management’ so as to improve its future efforts concerning
environmental issues.
Social
General Standard Disclosures
G4-1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27,
28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51,
52, 53, 54, 56, 57, 58
Specific Standard Disclosures
G4-EC1, EC2, EC3, EC5, EC6, EC7, EC8, EN3, EN4, EN5, EN6, EN7, EN15, EN16, EN18,
EN19, EN20, EN21, EN27, EN28, LA1, LA2, LA3, LA9, LA10, LA11, PR1, PR5
Opinions and Recommendations by Sector
[On a performance/issue perspective]
We present the following recommendations which are intended to help Korean Air establish a company-wide sustainability management strategy and respond to continuous
issues of sustainability.
The company’s project for the development of an airline industry cluster or a complex
for win-win cooperation appears to be a representative model of win-win management
whereby it fosters its suppliers by supporting them with technology and funds for parts
and equipment, as win-win cooperation with suppliers has become increasingly urgent
and important. Further, its active ventures to promote win-win business appear appealing, including its intensive promotion of outstanding suppliers by operating a portal site
for communication with the suppliers. It is recommended that the company strengthen
or complement the programs now under implementation based on their efficiency by
conducting an objective measurement of their efficiency.
12 August 2014
Kim, Moo-Hong
Acting KSA Chairman & CEO
Economic
Korean Air is superior in terms of its continual investments in the creation of customer
value, including the steady introduction of new aircraft, despite its difficult external en-
The Korean Standards Association (KSA), established as a special corporation in accordance with the Law for Industrial Standardization in 1962, serves as a knowledge service provider by distributing and disseminating such services as industrial standardization, quality management, sustainability management, KS certification and ISO certification. The KSA is committed to the sustainable development of Korean society in its roles as ISO 26000 National Secretary, certified GRI training partner, AA1000 assurance provider, KSI(Korea Sustainability Index) operator, UN CDM
DOE(development operational entity), and assurance provider of the Korean government’s greenhouse gas energy target management system
260 Haneul-gil (1370 Gonghang-dong), Gangseo-gu, Seoul 157-172, Korea / Tel +82-2-2656-7114
www.koreanair.com