'A once-in-a-century expert': New biography honors late Korean Air Chair Cho Yang-ho

Industry

Published: 25 Apr. 2024, 07:00 Updated: 25 Apr. 2024, 07:20

'A once-in-a-century expert': New biography honors late Korean Air Chair Cho Yang-ho

Former Hanjin Group Chairman Cho Yang-ho poses in the cockpit of Korean Air's first acquired A380 in Toulouse, France, in May 2011. [YONHAP]

The fifth anniversary of the passing of Cho Yang-ho, the former chairman of Korean Air Lines and Hanjin Group, came at a critical time for Korea's aviation industry as the nation's largest airline awaits approval for its merger with smaller rival Asiana Airlines.

Cho's illustrious career, since he joined Korean Air in December 1974, has spanned more than four decades, during which he held roles in various operational areas such as maintenance, repair, IT and sales. He rose to the positions of president in 1992 and chairman in 1999 and eventually became chairman of Hanjin Group in 2003.

Cho's visionary initiatives include the establishment of the SkyTeam alliance, the hosting of an International Air Transport Association (IATA) meeting in Seoul and bold investment decisions during turbulent times.

Turning crisis into opportunity

The former chairman's journey with Korean Air unfolded during a turbulent era marked by the shocks of the oil crises.

Korean Air confronted the repercussions of the second oil shock from 1978 to 1980, mirroring the struggles of major U.S. airlines like Pan Am and United Airlines, which were driven to downsize their workforces due by soaring fuel costs.

Cho, however, implemented cost-cutting measures while increasing resource utilization. Despite the adversity, aircraft purchases continued as scheduled, laying the groundwork for future opportunities to expand routes and tap into demand in the Middle East.

“Dealing with oil prices is about adaptation, not overcoming them,” Cho once remarked, according to the former chairman's biography, “Charting New Horizons: the Life and Legacy of Cho Yang-ho.”

Former Hanjin Group Chairman Cho Yang-ho inspects a B777 plane in 1995. [HANJIN GROUP]

During the 1997 Asian financial crisis, Korean Air had only 14 leased aircraft. Cho navigated that challenge by enhancing liquidity through the conversion of aging aircraft like the B747 and A300 into sales and lease-back arrangements. Departing from conventional practices that heavily relied on new aircraft acquisitions, this move allowed the airline to secure funds by leveraging secondhand planes.

Cho signed purchase contracts for 27 Boeing 737-800 and Boeing 737-900 models at the peak of the Asian financial crisis in 1998. Boeing reduced the down payment as a gesture of goodwill and facilitated favorable financing.

In 2003, as Iraq War, the outbreak of severe acute respiratory syndrome and the terrorist attacks on Sept. 11, 2001, challenged the global aviation industry, Cho identified an opportunity for advancement: He spearheaded the adoption of next-generation aircraft such as the Airbus A380. As the global aviation sector gradually recovered in the following years on increased demand, Korean Air's proactive approach allowed for the timely integration of those advanced aircraft into its fleet.

Former Hanjin Group Chairman Cho Yang-ho, second from right, led the establishment of the SkyTeam alliance on June 22, 2000, with the participation of four airlines, including Delta Air Lines, Air France, and Aeromexico. [HANJIN GROUP]

Forming the SkyTeam

Cho foresaw an evolving trend within the global aviation industry toward alliance systems.

Such arrangements, including United Airlines' Star Alliance and American Airlines' Oneworld alliance, began popping up during the late 1990s. Cho, observing that shift, opted to lead the creation of SkyTeam in 2000 whether than joining an existing one. The initiative united Korean Air, Delta Air Lines, Air France and Aeromexico.

Cho encouraged more Asian airlines to join SkyTeam and played a hands-on role in mentoring new members, standardizing operations and providing technical guidance. Today, SkyTeam includes 19 companies connecting 1,050 destinations in 66 countries.

Former Hanjin Group Chairman Cho Yang-ho, second from right, and Korean Air Chairman and CEO Walter Cho pose for a photo along with officials from Delta Air Lines after signing a joint venture agreement in United States on June 23, 2017. [HANJIN GROUP]

Competition intensified in the 2010s as U.S. and Japanese airlines began to form joint ventures, such as those between American Airlines and Japan Airlines as well as United Airlines and All Nippon Airways.

Alongside the formation of joint ventures between U.S. and Japanese airlines, such as partnerships between American Airlines-Japan Airlines and United Airlines-All Nippon Airways. This posed challenges for Korea's aviation industry, and particularly to maintaining transit competitiveness, which is a crucial aspect of revenue generation.

In response, Cho proposed a joint venture with Delta Air Lines, has been in effect since June 2018.

“Airline alliances are akin to marriages,” Cho said. “There must be trust between the partners. Delta is a more suitable partner [than American Airlines].”

Korean Air and Delta Air Lines obtained antitrust immunity authority from the U.S. Department of Transportation in 2002 and received approval for their partnership from Korea's Ministry of Land, Infrastructure and Transport in 2007. This immunity shielded Korean Air from legal challenges related to monopolistic practices when implementing joint ventures with Delta, particularly regarding trans-Pacific routes.

The joint venture resulted in eight Delta direct flights from the United States being rerouted from Narita to Incheon. Korean Air and Delta Air Lines relocated to Incheon International Airport's newly opened Terminal 2, further stimulating transit demand.

Korean Air Chairman and CEO Walter Cho speaks to press at the 2019 Annual General Meeting of the International Air Transport Association (IATA) held at Coex in southern Seoul on June 3, 2019. [NEWS1]

First IATA meeting in Seoul

Cho played a critical role in bringing the annual general meeting of the IATA to Korea for the first time in 2019.

IATA's annual general meeting is often referred to as a “United Nations conference of the aviation industry,” bringing together more than 1,000 influential figures in aviation to discuss industry trends and developments. The IATA claims 287 private airlines from 120 countries as members.

Cho's involvement in the IATA dates back to 1996 when he joined its Board of Governors. In 2014, he assumed a role on the strategy and policy committee, where he contributed to the group's major strategies, policies and budget initiatives. Korean Air was also engaged, serving as a key members of four of IATA's six industry committees.

Officials honor late Hanjin Group Chairman Cho Yang-ho at the 2019 Annual General Meeting of the International Air Transport Association (IATA) on June 2, 2019. [NEWS1]

Despite the anticipation surrounding the IATA meeting in Seoul, Cho passed away on April 8 of that year, just two months before the event. His son, Walter Cho, stepped in to chair the Seoul meeting on his behalf.

The IATA Annual General Meeting in Seoul brought prominent figures from the global aviation industry to Korea. Following the event, Korean Air convened SkyTeam's governing board to chart the future strategy and direction of the alliance.

Korean Air cabin crew members receive cardiopulmonary resuscitation training at the airline's cabin crew training center in Gangseo District, western Seoul. [KOREAN AIR LINES]

Safety first

Cho made safety a top priority in the airline industry.

Lee Im-gwang, a journalist and the author of Cho's biography, recounted an incident during the A380 test flight in 2007. Lee attempted to conduct an impromptu interview with Cho, whose immediate response was a reminder to “fasten his seat belt.” Following a ten-minute safety briefing, the interview proceeded.

The pivotal moment for Korean Air's safety protocols came in 1997 when flight KE801 crashed in Guam, presenting the airline with its most significant crisis to date. Cho took charge of safety reforms, focusing on accident response and prevention.

Following the Guam incident, Cho invested more than 1 trillion won ($729 million) in safety operations over the next two decades.

Delta Air Lines provided consulting on flight safety, prompting the carrier to revise its policies and procedures to align with international standards set by the Federal Aviation Administration. For instance, pilots were required to accumulate 4,000 flight hours, rather than 3,000 hours, to qualify for promotion to captain.

Korean Air implemented a safety management system in 2008 and introduced its own protocol, SafeNet, the following year.

Cho's commitment to safety bore fruit: Korean Air has maintained a spotless safety record since 2000. That dedication is also reflected in Korean Air's insurance premium — the lowest in the world — which takes into account a comprehensive assessment of safety performance and risk factors.

Korean Air has been investing over 100 billion won in the safety sector every year, which is utilized for employee training, the procurement of advanced equipment, and participation in international seminars to stay abreast of global trends.

“Charting New Horizons: the Life and Legacy of Cho Yang-ho,” the biography of the late Hanjin Group chairman [HANJIN GROUP]

Principle-driven management philosophy

Throughout his tenure, Cho promoted the concept of “system management theory” — wherein a CEO is likened to the conductor of an orchestra, ensuring that the system operates smoothly and facilitating the optimal use of everyone's skills.

Cho stressed the importance of safety in the transportation sector, emphasizing its critical role on the front lines where customer interactions occur. He believed that service was integral to the airline industry's success and prioritized customer-centric management to that end.

Korea Enterprises Federation Chair Sohn Kyung-shik, who had a close relationship with Cho, penned the foreword to his biography.

Korean Air Lines' cabin crew members [KOREAN AIR LINES]

“No other executive in the history of global aviation has displayed the level of expertise and sustainability demonstrated by Cho,” Sohn wrote. “Without a doubt, he was a once-in-a-century aviation expert.”

The year 2024 marks a crucial period for Korean Air as it nears the completion of its long-anticipated acquisition of Asiana Airlines. The airline has submitted documents to antitrust regulators in 14 countries, obtaining approval from 13 nations, and is awaiting a decision from the United States. It hopes to receive that green light within the first half of this year.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]