ITA CODE: PR AIR

Overview                                                                                                            

Source: Korea Aerospace Industries Association (KAIA), Unit: USD Million.

Total Market Size and Total Local Production refer to South Korea’s local aerospace manufacturing companies’ output. Data on Exports and Imports are based on purchasing order and contract amount.

South Korea is the United States’ 18th largest market for aerospace exports according to the latest U.S. Department of Commerce data as of May 2022. In 2021, the United States’ aerospace exports to South Korea recorded a total of $1.285 billion. While civilian aircraft, engines and parts made up nearly 70 percent of the exports valued at $870 million, parts and components of airplanes or helicopters, and air combat simulators and parts all-combined accounted for about 25 percent of American exports to South Korea. In 2021, nearly 95 percent of South Korea’s total volume of aerospace imports from the world were made up of aircraft and their parts and components with more than 80 percent of it imported from the United States.

 Source: Korea Aerospace Industries Association (KAIA), Unit: USD Million.

 

South Korea’s aerospace industry is largely driven by major players such as the Korea Aerospace Industries (KAI) and Korean Air. Korean Air is the largest commercial airline and national carrier of South Korea. KAI and Korean Air manufacture and assemble parts and components for Boeing and Airbus, and they also design, develop, and produce aircrafts using homegrown technology such as unmanned aerial vehicles (UAV), rotor-wing and fixed wing aircrafts. KAI introduced its first civilian aircraft Naraon in 2008 making Korea the 28th nation in the world to build and fly an indigenous plane. In April 2021, KAI rolled out a prototype of the multirole fighter aircraft developed for the ROK Air Force under the Korean Fighter eXperimental (KF-X) program. 

In addition, maintenance, repair, and overhaul (MRO) services for commercial and defense aircraft is another key area where KAI and Korean Air have a substantial presence in the Korean aerospace industry. Korean Air, being the only commercial airline equipped with an in-house MRO facility with matching capabilities, provides maintenance services for its own fleet.  In 2018, KAI established a subsidiary MRO company known as the Korea Aviation Engineering and Maintenance Service (KAEMS) to provide MRO services for the civil aerospace industry. Headquartered in Sacheon, South Gyeongsang Province (Gyeongnam), KAEMS is a designated MRO service provider by the Ministry of Land, Infrastructure, and Transport (MOLIT) and shares ownership with the Korea Airport Corporation.

In August 2021, MOLIT outlined new plans to expand South Korea’s domestic MRO market currently valued at $611.5 million into a $4.3 billion industry by 2030. The government aims to incentivize onshoring of MRO activities by South Korean airlines previously outsourced overseas and promote the growth of local manufacturing of parts and components industry.

In the Gyeongnam region, there are more than 100 small and medium-sized aerospace companies with specialty in aviation, aircraft assembly, mechanics, and mechatronics forming an aerospace industry cluster, also known as the Korean Aerospace Valley (KAV). Aerospace companies in this region manufacture and supply parts and components to KAI and Korean Air, and export overseas. 

In October 2021, South Korea test-launched Nuri, the first indigenously developed three-stage launch vehicle and successfully test-launched it for the second time in June 2022. Although progress in space program development has been rather sluggish, South Korea seeks to continue its investment in the space domain focusing on the development of indigenous space technology. With plans to strengthen defense capabilities in outer space, the Defense Acquisition Program Administration (DAPA), the country’s defense procurement agency, plans to invest $13.6 billion over the next 10 years. This includes an investment of $1.3 million by 2030 for developing core space technologies used in military satellites and launch vehicles.

Given its strategic significance and growth potential, the government has identified the space industry as one of its 10 strategic sectors to receive substantial public funding.  In February 2022, the Ministry of Science and ICT (MSIT) announced that it will be focusing on projects in 3 key areas for space development – launch vehicles, satellites, and space exploration – with the budget of $610 million in 2022. Projects include the development of next-generation launch vehicle technology, launching multi-purpose satellites and a lunar orbiter, and the development of a satellite navigation system, also known as the Korea Positioning System (KPS). Under this plan, South Korea is planning to develop 170 satellites for public purposes and to launch them using 40 rockets by 2030. 

Commercial Airliners and Airports

Korean Air is the largest passenger and cargo carrier company in the country, as well as the largest domestic consumer of aircraft, equipment, parts and components, and services. Korean Air is also a major exporter of aerospace parts and components. Known as South Korea’s second largest airlines, Asiana Airlines is currently in the process of being acquired by Korean Air as of May 2022.

Low-Cost Carriers (LCCs) have demonstrated rapid growth in the South Korean market up until the COVID-19 pandemic hit the airline industry. There is a total of 9 LCCs operating within the country. Since most of these LCCs focus on providing flight services for domestic routes with limited service for overseas, pandemic travel restrictions and social-distancing measures have reduced demand and have been a major setback impacting the industry at large for the past couple of years.

There are two public airport companies in Korea: The Incheon International Airport Corporation (IIAC) and the Korea Airport Corporation (KAC). IIAC owns the nation’s largest international airport with operations based in Incheon City. The Incheon International Airport has won numerous global awards attesting its level of quality and service based on global standards. KAC operates and manages a total of 14 airports across the country which includes: Gimpo, Gimhae, Jeju, Daegu, Ulsan, Cheongju, Pohang, Yangyang, Sacheon, Gunsan, and Wonju. There are eight international airports with routes mainly connecting China and Japan. 

Best Products/Services

• Aircrafts and aircraft upgrades
• Radar and surveillance devices
• Avionics
• High-tech mission equipment and components, sensors, optical devices for aircraft and UAVs
• Opportunities

Top U.S. aerospace export items to South Korea include commercial aircraft, aircraft engines, equipment and parts, as well as military aircraft and their parts and components. The U.S. continues to be the leading foreign supplier of aerospace and defense products and services, taking up a prominent share of South Korea’s import market.

In conjunction with rapidly developing smart technologies, unmanned aerial vehicles (UAV) are considered as a key area for the future aerospace industry. In 2019, the ROK government announced plans to develop the drone industry with supporting regulation. Due to the government-driven focus on growing the domestic industry, opportunities seem to be limited for foreign suppliers seeking to tap into the market with their UAV products or systems as a complete product. Nevertheless, there is demand for core mission systems, and key parts and components that are deployed in UAVs, hence some opportunities for foreign companies to enter the market.

South Korea’s space market also presents limited opportunities for foreign suppliers especially in satellite launching services, high-tech sensors, and optical devices for payload systems.

KORUS FTA Impact

The U.S.-Korea Free Trade Agreement entered into force on March 15, 2012. All U.S. aerospace exports to Korea receive duty-free treatment due to the implementation of the U.S.-Korea Trade Agreement.  

Resources

Trade Shows

• Seoul International Aerospace and Defense Exhibition (ADEX) 2023, October 17 - 22, 2023

Key Contacts

• Korea Aerospace Industries Association (KAIA)
• Korea Aerospace Research Institute (KARI)
• Ministry of National Defense (MND) 
• Ministry of Science and ICT (MIST)
• Ministry of Land, Infrastructure, and Transport (MOLIT)
• Incheon International Airport Corporation (IIAC)
• Korea Airport Corporation (KAC)

Local Contact

U.S. Commercial Service Korea   
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 03141, Korea
Tel: 82-2-397-4535
office.seoul@trade.gov

https://www.trade.gov/south-korea