KAI sets sights on Asia No. 1 in ‘new space’ era
Korea‘s sole aircraft manufacturer aims to carve out a niche in satellite biz; KF-X fighter price set at $65m
By Kim Byung-wookPublished : April 4, 2021 - 16:30
![Korea Aerospace Industries President and CEO Ahn Hyun-ho holds a Q&A session with reporters in the Grand Ballroom of Coex in southern Seoul, Friday. (KAI)](http://res.heraldm.com/phpwas/restmb_idxmake.php?idx=640&simg=/content/image/2021/04/03/20210403000129_0.jpg)
From flying cars to private satellites, the paradigm of global aerospace industry is shifting faster than ever.
After SpaceX ushered in the dawn of the “new space” age, private players are now making an aggressive foray into the space industry, which had been dominated by governmental agencies.
At this turbulent time, Korea Aerospace Industries, the nation’s sole aircraft manufacturer, aims to capture new opportunities in order to rise as Asia’s No. 1 aerospace company by 2030.
Ahead of a rollout of its next-generation KF-X fighter jet this week, Korea’s main-bourse listed KAI laid out strategies at a press conference on Friday on how it will raise the revenue from this year’s projected 3 trillion won ($2.6 trillion) to 10 trillion won by 2030.
Some 3 trillion won of the target amount, according to KAI President and CEO Ahn Hyun-ho, should come from new businesses -- urban air mobility (UAM) and satellite analysis services -- and the rest from its main business of aircraft manufacturing.
“By the end of 2020s, KAI will develop an independent UAM model with five propellers that can travel 400 kilometers carrying up to five passengers,” said Song Ho-chul, head of business management strategy at KAI, during his presentation to reporters in the Grand Ballroom of Coex in southern Seoul.
“Aircraft is the basics and the flight control technology is the key of the UAM business. KAI has decades of know-hows in this. Many companies have announced that they will launch UAM business, but KAI is already in it.”
According to Morgan Stanley estimates in 2019, the global UAM market size is predicted to reach $1.47 trillion in 2040.
However, if there’s one thing KAI lacks in the UAM business, it’s brand power.
“There will be different types of UAMs, and the fight will be about whose model becomes the standard. KAI can make great UAMs, but can we compete in terms of brand and lead the market standard? So KAI is closely monitoring the market and looking for a consortium to partner up,” Ahn said, adding that KAI is currently in talks with a local company for a potential partnership.
As for its satellite business, KAI hopes to carve out a place of its own in the global satellite industry.
“KAI is not trying to compete against SpaceX or Blue Origin. While the two focus on reusable launch systems and satellite communications services, KAI’s main business model is satellite footage analysis services,” said Han Chang-heon, head of KAI’s future business division.
SpaceX and Blue Origin’s satellite internet services require thousands of small low-Earth satellites, which operate from 500 kilometers to 2,000 kilometers above Earth’s surface, whereas traditional big and mid-sized satellites are stationed far higher, at roughly 36,000 kilometers. Such close distance allows LEO satellites to send and return data much faster and have the potential to rival or possibly exceed ground-based networks.
But KAI has no plans of yet to provide satellite internet services, Han said.
“A conventional satellite can spin together with the Earth and have its location fixed above one country. However, an LEO satellite, due to its short distance with Earth, has to keep spinning. For this reason, when an LEO satellite is right above the Korean Peninsula, for example, it can’t provide internet service to the region no more than four minutes,” he said.
Instead, KAI aims to launch a business that doesn’t require a belt of thousands of small satellites -- satellite footage analysis services. KAI is currently developing small satellites with the Korea Advanced Institute of Science and Technology and Satrec Initiative -- the nation’s sole developer and manufacturer of key satellite components.
“For example, the analysis service will provide clients with weather forecasts and locations of oil reserves. There are a lot of Southeast Asian countries who want the service. For now, KAI is in talks with Airbus to source satellite footages from the European aerospace giant and provide analysis services to Southeast Asian customers,” CEO Ahn said.
While pursuing future growth engines in full force, KAI pledged to bolster environmental, social and governance efforts through developing electric airplanes.
“KAI will develop a prototype of an electric airplane by 2029. There are two ways we can power the electric airplane -- either by a hybrid engine or with hydrogen fuel cells. There is a question mark over which technology will prevail, but KAI will complete (airplane electrification) technology by 2025 and flight operation system by 2029,” said Chief Technology Officer Yoon Chong-ho.
![Song Ho-chul, head of business management strategy at KAI, gives a presentation on the company’s strategy to become Asia’s No. 1 aerospace firm by 2030. (KAI)](http://res.heraldm.com/phpwas/restmb_idxmake.php?idx=640&simg=/content/image/2021/04/03/20210403000127_0.jpg)
Above all, KAI expressed a determination to reignite aircraft exports this year, which had been dealt a massive blow from the coronavirus outbreak.
“Last year, KAI was this close to exporting three Surion choppers to Indonesia, but the deal was called off due to COVID-19. Also, KAI was in a favorable situation to export Surion choppers and KT-1 basic training aircraft to the Philippines, but the country sliced defense budget amid the pandemic,” Ahn said.
“This year, we are hoping to export two FA-50 advanced trainer jets to Thailand. Also, we are concentrating our efforts to export FA-50 jets to Columbia and Malaysia.”
The pandemic also almost crippled the company’s much-anticipated KF-X project.
“The KF-X program requires key components imported from Europe and the US. However, the pandemic triggered shutdowns in those regions, pushing back the project’s schedule by six months. ... we managed to put things back on track at the end of December. I can’t thank my staff and executives enough who slept at the office to solve this issue,” Ahn said.
KAI will hold a launching event of the 4.5-generation stealth fighter jet in the second week of this month, according to the CEO.
Starting 2028, KAI will begin the export of the KF-X aircraft based on its competitiveness in price.
“It takes about 100 billion won to 200 billion won to acquire one F-35 fighter jet. Lockheed Martin aims to bring down the price to $80 million per unit, but the maintenance costs are so high that even the US is considering to develop new 4.5 generation fighters or upgrade existing fighters,” said Ryu Kwang-su, head of aircraft program division.
“KAI aims to set the price of KF-X fighter at $65 million with minimized maintenance costs. Our analysis says that such price range will offer KF-X a competitive edge in the global export market.”
By Kim Byung-wook (kbw@heraldcorp.com)