SEOUL, South Korea — One could hardly get a few minutes into a conversation about airplanes without mentioning the name “Boeing” or one of the thousands of aircraft they’ve produced for nearly a century. The American multinational aerospace and defense company, founded in 1916 by William E. Boeing in Seattle, Washington, has enjoyed a long and storied success, including over sixty years as the dominant player in the Korean market.
In 1988, Boeing opened its first office in Seoul and began forming partnerships with local businesses to help cement its position here. Yet, while the company has enjoyed little competition for defense sales in the ROK, they have seen their global rival, Airbus, slowly chip away at their once peerless commercial market share on the peninsula.
Of Korea’s two major carriers, Asiana Airlines currently operates a fleet of 75 aircraft — 35 Airbus and 40 Boeing planes, while Korean Air flies 104 airplanes — 29 Airbus and 75 Boeing. In what has been a boon for Boeing, four of the five low-cost carriers in Korea, including Jeju Air and Air Busan, operate all-Boeing fleets, featuring variants of the company’s global top-seller, the 737 series.
While high-end military aircraft such as the F-15K fighter and the recently delivered Airborne Early Warning & Control Peace Eye aircraft continue to produce dividends, Boeing’s commercial aircraft branch has had to step up its game to compete for not only Korea’s needs, but the growing hunger for more aircraft across all of Asia.
One of the original Boeing DC-3s operated by Korea Air Lines.
According to industry estimates, air travel in the region is expected to grow annually at 6.7 percent over the next 20 years. That amounts to about 500 new airplanes in Korea alone. Including the 110 aircraft already on order by Korean carriers, Boeing expects their fleet in Asia to increase from 690 planes as of 2010 to 1,520 aircraft by 2030.
Two years ago, 25-year Boeing veteran, Patrick Gaines, left Seattle, where he worked as vice president of Customer Support for Asia-Pacific, to take over as the CEO of Boeing Korea. His job description was simple: strengthen the company’s position in both the commercial and military markets in Korea.
Prior to working for Boeing, Mr. Gaines attended the United States Military Academy at West Point, graduating with honors in engineering before going on to serve as an airborne ranger, a warrant officer pilot and then operations officer for aviation deployments around the globe.
Outside of his work with the aerospace giant that employs around 160,000 workers in over 90 countries, Mr. Gaines serves as a member on Korea’s Presidential Council on National Competitiveness, an advisory group that advises the Korean president on efforts to sustain economic growth and strengthen national competitiveness. Not a bad spot to have the ear of one of your biggest customers.
I had a chance to meet Mr. Gaines and his wife at a party during the Busan International Film Festival last year. I found him to be both affable and, if you’ll pardon the pun, quite down to earth for a man who sits at the upper echelon of one of the worlds most influential multinational companies.
Just before the holidays we talked about how his first two years in the new position have gone, whether Airbus is a worry and his excitement over the company's futuristic new 787 Dreamliner.
Granted, he did dodge my question on any new prospects for the flying car~
You have been chief executive of Boeing Korea for nearly two years. What would you consider some of your major accomplishments thus far?
In September, we reached a very meaningful milestone in the Airborne Early Warning & Control (AEW&C) Peace Eye program as the first aircraft finally arrived here in Korea. We are also positioning the F-15 Silent Eagle in preparation for the FX-III program. Korea has also shown interest in Apache helicopters, Chinook upgrades, tankers, Performance Based Logistics (PBL), and support for current platforms.
On the commercial side, Korean Air is set to receive its first 747-8 Freighter in the near future. Korean Air is the only airline to order both the freighter and passenger versions of the 747-8, so this is very exciting news. The airline has also ordered ten 787-9 Dreamliners.
In my role as Chairman of the American Chamber of Commerce here in Korea, I was very pleased with the passage of the KORUS FTA. The US and Korea have always had a strong political and military alliance, and now with the KORUS FTA we will develop an even stronger economic alliance.
I am also very pleased that we have increased our employee volunteer activities by over 50 percent. Korea is a wonderful country to live and work in and we are glad we can give something back to the community.
Airbus has been chipping away at Boeing’s position as the dominant player here on the peninsula. What steps is the company taking to remain on top in Korea and reverse the gains made by Airbus?
When you look at current and future numbers, I think Boeing is still the preferred provider for the Korean airline industry. Boeing has always built great airplanes, yet in Korea we also have an ongoing partnership with Korean industry, which provides benefits to both sides. Boeing and Korea have a solid history of working together that goes back more than 60 years.
The first aircraft in Korea from the heritage of Boeing was the Douglas DC-3, and since then, Boeing has continued to develop its partnership with Korea, forging business relations and supporting the growth of the Korean aerospace industry. Korea has always been a great partner to Boeing, and we are very fortunate to have partners such as Korea Aerospace Industries (KAI) and Korean Air Aerospace Division (KAL-ASD) here.
I see a really great future here in Korea and we want to expand Boeing’s presence locally by continuing to build on our existing partnership with Korean industry.
Before coming to Korea you were vice-president of customer support for the Asia-Pacific region. What are some of the differences in customer culture between America and Asia?
One of the reasons Asia is such a wonderful place to live and work in is the service culture that you see everyday. The customer here is always treated with respect. All you have to do is look at the awards that airlines in Korea have won to understand that there are many businesses in the United States that could learn a lot from the service culture here in Korea and in most parts of Asia.
What are some of the adjustments you have had to make in regards to working in the Korean as opposed to the American work culture? Have there been any nuances or business practices that have required you to alter your approach?
Having worked with Korean companies for many years, I did not experience many surprises when I assumed this role. The work ethic demonstrated daily by most Koreans is unsurpassed worldwide. If anyone ever questions the economic miracle that Korea has seen in the last 60 years, let them come and work in Korea for a while. It does not take long to see that this miracle was fueled by some of the most dedicated and hard working employees around. I believe my biggest challenge is trying to emphasize the importance of a work/life balance.
What are some of the technological innovations that air travelers can look forward to in the future with Boeing?
The 787 Dreamliner is our latest and greatest. It’s a super-efficient airplane that will change the game. It brings big-jet ranges to mid-size planes, offers unmatched fuel efficiency, boasts exceptional environmental performance, and travels at speeds similar to today’s fastest wide-body aircraft – mach 0.85 (560 mph). Airlines will enjoy more cargo revenue capacity, while passengers will enjoy a whole new interior environment featuring higher humidity that will increase comfort and convenience. Even the windows are 65% larger than those of other aircraft in the same class.
The key to the 787 Dreamliner’s exceptional performance is a suite of new technologies, with composite materials making up 50 percent of the 787’s primary structure, including the fuselage and wings.
What’s also interesting is that more than 50 of the world's most capable, top-tier supplier partners, including those from Korea, are working with Boeing to bring innovation and expertise to the 787 program. The program was launched in April 2004, and we delivered the first 787 to All-Nippon Airways in September of this year. As I mentioned already, Korean Air has ordered 10 787-9s, which they will begin receiving in 2016. We are very excited to see this plane finally roll out and are confident that it will provide a totally different flight experience for passengers.~
Boeing's bet on the future of air travel: The Dreamliner
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