South Korea - Country Commercial Guide
Aerospace Industry

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-09-02

ITA CODE: PR AIR

Overview                                                                                                                

 

2018

2019

2020

2021 (Forecast)

Total Market Size

6,732

8,487

6,826

6,985

Total Local Production

4,714

6,028

4,903

4,984

Total Exports

2,617

2,822

1,632

1,613

Total Imports

4,635

5,281

3,555

3,614

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

Note: 25.2 percent decrease in aerospace market size is due to COVID 19 which will have continuous impact in 2021 market size.

According to trade figures announced by Korea International Trade Association, Korea was the19th largest market for U.S. aerospace exports in 2020.  In 2020, total U.S. aerospace exports to Korea exceeded 1 billion USD (including aerospace products in the defense sector).  In total value, U.S. aerospace sales constituted about 77 percent of Korea’s total aerospace imports in 2020. 

Over 98 percent of the total aerospace imports into Korea are for commercial & defense aircraft and their parts and components.  Of this, 79 percent of Korea’s aircraft, parts and component imports were from the U.S. in 2020. 

Category

2019

2020

2021 (Forecast)

Export

Import

Export

Import

Export

Import

Aircraft

Whole platform

449

2,810

337

1,455

335

1,487

Parts/Components

2,421

2,268

1,915

1,880

1,901

1,922

Space parts

20

203

168

220

156

205

Total

2,890

5,281

2,420

3,555

2,392

3,614

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

Major Local Players

Korea’s aerospace industry is driven by Korea Aerospace Industries and Korean Air, one of the largest commercial airliners in Korea.  KAI and Korean Air are also the leading companies which make and assemble parts for Boeing and Airbus.  KAI and Korean Air are active in developing indigenous aircraft including UAVs, rotor-wings, and fixed wings.  In 2008, KAI introduced its first non-military private aircraft, ‘Naraon’, 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.

Both Korean Air and KAI are active in providing MRO (Maintenance Repair and Operations) services for both commercial and defense aircraft. Korean Air is the only commercial airliner that has its own MRO capability and equipped with the MRO facilities.  Korean Air provides MRO services for its own fleet.  In 2018, KAI established a subsidiary MRO company, Korea Aviation Engineering & Maintenance Service, Ltd. (KAEMS) to provide MRO services for the civil aerospace industry.  Headquartered in Sacheon, Gyeongnam province, where KAI’s HQ is located, KAEMS is designated by the Ministry of Land, Infrastructure, and Transport as a state-owned operator and is partly owned by Korea Airport Corporation and KAI.

Further, there is a cluster of Korean small and medium-sized aerospace companies in Gyeongnam area forming a “Korean Aerospace Valley.”  The companies in this aerospace valley focus on supplying parts and components to KAI and KAL, and exporting. Gyeongnam Export Support Corps for Aero-parts (GESCA: https://www.kav.or.kr/) supports these aerospace companies and are currently actively cooperating with the foreign aerospace companies for both imports and exports.

Commercial Airliners

Korean Air is the largest passenger and cargo carrier company in Korea and is one of the largest consumers of aircraft, equipment, components, and various aerospace services — as well as being one of the major exporters of aerospace parts and components.  Asiana Airlines is the second largest airline in Korea, however, is going through financial difficulties and as of May 2021, Asiana is in the process of being acquired by the Korean Air.

LCCs in Korea demonstrated a dramatic growth in annual sales revenue of 40 percent in the past five years until 2019.  However, due to the COVID-19 pandemic, LCCs have been greatly impacted and as a result, restructuring, mergers, and acquisitions are currently taking place.

Airports

Korea has two state-owned airport companies, Incheon International Airport Corporation (IIAC) and Korea Airport Corporation (KAC).  IIAC is the nation’s largest and has its main international airport in Incheon City.  Incheon Airport was voted at the top in ‘airport service/quality’ for ten years in a row. It has also won the highest score in the Airport Service Quality (ASQ) category by the Airports Council International (ACI), which consists of 1,700 airports around the world. KAC operates a total of 14 airports in Korea (Gimpo, Gimhae, Jeju, Daegu, Ulsan, Chungju, Muahn, Kwangju, Yeosu, Pohang, Yangyang, Sacheon, Kunsan, and Wonju), of which seven have international status with routes mainly to China and Japan. 

Best Products/Services

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

Opportunities

Top U.S. aerospace exports to Korea include complete commercial aircraft, commercial aircraft engines, equipment, and parts, as well as military aircraft and their parts and components.  The U.S. continues to be the dominant foreign supplier of aerospace/defense products and services, with a dominant import market share.

As smart technologies evolve, unmanned aerial vehicles are considered as the industry of the future.  The Korean government recently, in 2019, announced plans to develop the drone industry with supporting regulation. Although foreign UAS and counter-UAS as a whole system would have limited opportunities in Korea due to the Korean government’s strong emphasis on local industry development, there’s demand and opportunities for core mission systems and key parts and components that are deployed in the UAS.

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

KORUS FTA Impact

All U.S. aerospace exports are duty-free as of March 15, 2012, and as a result of the implementation of the Korean-U.S.FTA (KORUS).

Resources

Trade Shows

Seoul International Aerospace & Defense Exhibition 2021 (Seoul Air Show 2021)
October 15 - 20, 2021

Key Contacts

Korea Aerospace Industries Association (KAIA)

Korea Aerospace Research Institute (KARI)

Ministry of National Defense (MND)  

Ministry of Science, ICT, and Future Planning (MSIP)

Ministry of Land, Infrastructure, and Transport (MOLIT)

Incheon International Airport Corporation (IIAC)

Korea Airport Corporation (KAC)

Local Contact

Ms. Sunny Park
Commercial Specialist
Commercial Service Korea
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 03141 Korea
Tel: 82-2-397-4164
Sunny.park@trade.gov
www.trade.gov/south-korea