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’ 13th largest market for aerospace exports according to the latest U.S. Department of Commerce data as of May 2023. According to the latest U.S. Census data, the United States’ aerospace exports to South Korea totaled $2.2 billion in 2022. While civilian aircraft, engines, and parts made up nearly 80 percent of the exports valued at $1.7 billion, the rest of American exports to Korea included aircraft launch gear, spacecraft parts, parachutes, unmanned aircraft and others. According to South Korean trade data as of May 2023, nearly 72 percent of South Korea’s total volume of aerospace imports were from the United States in 2022.

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

South Korea’s aerospace industry is largely driven by major players such as Korean Air and Korea Aerospace Industries (KAI). Korean Air is the largest commercial airline and South Korea’s national carrier. KAI manufactures and assembles parts and components for Boeing and Airbus, and they also design, develop, and produce aircraft using homegrown technology such as unmanned aerial vehicles (UAV), and rotor-wing and fixed-wing aircraft. 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 market. 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.

While South Korea continues to source a majority of its needed key aircraft parts and components from overseas, the government is seeking methods to support and develop its MRO market using homegrown technology. 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 to promote the growth of local manufacturing of a parts and components industry.

In the Gyeongnam region, there are more than 100 small and medium-sized aerospace companies specializing 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 the space domain, while progress in space program development has been rather sluggish, South Korea seeks to continue its investment 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 billion 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 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 threekey areas for space development – launch vehicles, satellites, and space exploration – with a 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.

In June 2022, South Korea successfully test-launched Nuri – the first indigenously developed three-stage launch vehicle. A few months later in August 2022, South Korea witnessed another success in launching their Korea Pathfinder Lunar Orbiter (KPLO) Danuri aboard Space X’s Falcon 9 which marked its first-ever lunar mission. In May 2023, South Korea succeeded again in launching its third space rocket which helped launch 8 small satellites into orbit.

With aspirations to develop its domestic space industry, South Korea set a record budget of $674 million for 2023. President Yoon Suk-yeol has announced the vision of building a space economy in Korea by doubling the space budget during the next five years and to eventually expand funding to $76.8 billion by 2045.

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. South Korea’s second largest airline, Asiana Airlines, is currently in the process of being acquired by Korean Air as of May 2023.

Low-Cost Carriers (LCCs) have demonstrated rapid growth in the South Korean market up until the COVID-19 hit the airline industry. There are eight LCCs operating within the country. Since most of these LCCs focus on providing flight services for domestic routes with limited overseas service, low pandemic travel demand was a major setback to development. With post-pandemic travel rapidly recovering, LCCs are introducing new international routes and seeing high demand for travel.

Simultaneously, South Korea has witnessed an increased demand for use of private jets and private jet services during the pandemic. While the general use of private jets and services is still not common, there has been a spike in the use of such services particularly among business executives and those working in the entertainment industry. Korean Air is seeking to expand its business jet services operations through their affiliate company K Aviation. In 2016, the first-ever business terminal for business aviation services opened up in Gimpo and is known as the Seoul Gimpo Business Aviation Center (SGBAC).

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. 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. Korea has eight international airports with routes mainly connecting to China and Japan.

Opportunities

Top U.S. aerospace exports 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 key aerospace and defense products and services.

In conjunction with rapidly developing smart technologies, unmanned aerial vehicles (UAV) are considered 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 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 still exist 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.

Best Products/Services

·        Aircrafts and aircraft upgrades 

·        Radar and surveillance devices

·        Avionics

·        High-tech mission equipment and components, sensors, optical devices for aircrafts and UAVs

Resources

Trade Shows

·        Seoul International Aerospace and Defense Exhibition (ADEX) 2023, October 17 - 22, 2023 
- every two years

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