Ahead of the Airline Economics Growth Frontier conference in Seoul, we analysed the development in the South Korean fleet and related aircraft values using VV Aviation data.
Boeing 737-800 (10 year old)
The Boeing 737-800 is the workhorse of the Korean fleet, accounting for one quarter of aircraft registered in South Korea. Although it is no longer in production, the 737-800 was the main beneficiary of the grounding of its successor, the 737 MAX 8. Demand for a ready replacement aircraft resulted in Market Values that were well above their long term Base Value since 2019.
In 2020, Market Values suffered due to the drop in demand during the pandemic, and the MAX 8 has since reentered service. At the same time, demand recovery was stronger than expected, and the 737-800’s desirability as a freighter conversion platform increased. These factors resulted in some positive upward Market Value movement. Conversely, the long term Base Value trend is decreasing slightly, as it incorporates the Market Value downward movement since 2020.
Figure 1: Value Change of a 10 Year Old Boeing 737-800 between 2020 and 2023.
Airbus A321neo (5 year old)
The A321neo is set to have a significant presence in South Korea. Korean Air and Asiana are passenger carriers that have extensive backlogs for this aircraft. Another notable airline is Air Busan, which operates the aforementioned type. As a new technology aircraft, the A321neo is in high demand worldwide. It also enjoys the advantage of having a market all to itself. Its main competitor, the Boeing 737 MAX 10, is still undergoing certification and there is no other Narrowbody of similar capacity in development at present. As a result, A321neo Market Values have recovered since Covid-19.
Figure 2: Value Change of a 5 Year Old Airbus A321neo between 2020 and 2023.
Both Korean Air and Asiana have significant fleets of the A380. As the largest aircraft built, the A380 is particularly dependent on high demand to service its routes profitably. As a result, it was heavily impacted by the drop in demand due to Covid-19, with Market Value dropping more than 25% below Base Value in July 2020. Korean Air announced its intention to retire its A380 fleet by 2026. A few months prior, the airline stated their plans to merge with Asiana, which places uncertainty on Asiana’s A380 fleet.
Since then, both carriers have reactivated a portion of their A380 fleets. There appears to be a wider global trend of increasing demand on trunk routes that can justify use of the aircraft, thus enabling a modest recovery.
Figure 3: Value Change of a 10 Year Old Airbus A380 between 2020 and 2023.
Boeing’s 737 MAX 8 was cleared for a return to service, subject to compliance with certain requirements, beginning in December 2020 in the USA. Other countries followed suit, notably Canada, the UK and EU (January 2021), India (August 2021), Indonesia and China (December 2021). The recovery in Market Values has broadly followed the type’s reintroduction across an increasingly global operator base.
Figure 4: Value Change of a 5 Year Old Boeing 737-8 between 2020 and 2023.
South Korean Live Fleet Overview
Figure 5: Number and Market Value of Live Narrowbody and Widebody Aircraft.
Figure 6: Number and Average Age of Live Narrowbody and Widebody Aircraft.
South Korean Flight Activity
Figure 7: Number of Routes and Flights of Narrowbody and Widebody Aircraft between 2019 and 2022.