Korean Air has rejected claims by Amerijet that it impeded an application for a foreign carrier permit to protect its turf in South Korea, telling U.S. regulators that any delays are tied to a confusing arrangement between the Miami-based cargo airline and Maersk Air Cargo that does not comply with the Korea-Denmark air trade agreement.
In a filing, the Korean flagship carrier said the Department of Transportation should disregard Amerijet’s complaint and review without delay business jet subsidiary K-Aviation’s recent request to operate 10 to 15 flights per year for a small number of customers.
Amerijet last month blamed Korean Air for stealthily opposing its request for a foreign carrier permit to provide scheduled service at Incheon International Airport in Seoul. It asked the DOT to suspend action on the K-Aviation application until Korean transport authorities gave their approval.
Amerijet currently operates a route multiple times per week via Seoul as a contractor to Maersk Air Cargo, but must apply every month for charter flights — at extra legal expense and operational uncertainty for the partners.
Korean Air said it had no idea why it was taking longer for the Ministry of Land, Infrastructure and Transport (MOLIT) to process Amerijet’s application for full market access, but subsequently acknowledged it contacted the ministry to express concerns about “the integrity of the licensing process and to ensure fair competition” in light of the relationship with Maersk.
“Amerijet should look to its own arrangements and its own commercial partner — not K-Aviation and Korean Air — as the source of any alleged delays in processing its scheduled application,” Korean Air said in the Nov. 1 filing. “Rather than substantively objecting to K-Aviation’s application, Amerijet points to alleged delays in the processing of its own application for scheduled cargo authority by MOLIT, painting itself as a victim of a protectionist bureaucracy acting at the supposed direction of Korean Air.”
Korean Air operates a fleet of 23 freighter aircraft and is the world’s third-largest carrier by volume when express parcel carriers FedEx and UPS are excluded. Cargo revenue in the third quarter fell 51% year over year to $703 million, the company said this week. Privately held Amerijet is a midsize cargo airline with a fleet of more than 20 aircraft.
Amerijet began providing crews and operating flights for Maersk Air Cargo, the rebranded in-house airline of ocean shipping powerhouse A.P. Moller-Maersk, last November. Maersk, a Danish company that has transformed itself into an end-to-end provider of logistics services, provided Amerijet with three Boeing 767-300 purchased directly from Boeing.
Amerijet operates one route three times per week connecting Shenyang, China, Seoul and Maersk Air Cargo’s hub at Greenville-Spartanburg International Airport in South Carolina. The other two freighters provide six days of weekly service between Hangzhou, China, Seoul and Maersk’s other U.S. hub at Chicago Rockford International Airport.
Korean Air said MOLIT is simply doing its job to check whether Maersk is circumventing the air service agreement between Korea and Denmark, under which Danish carriers don’t enjoy seventh-freedom cargo rights, and Korean law, which doesn’t permit long-term wet leasing.
A seventh freedom of the skies is when a state allows international airlines to provide scheduled air service without any connection to their home state. Wet leasing is an aircraft rental bundled with services — crew, maintenance and insurance — to operate the aircraft as opposed to a straight lease under which the customer operates the aircraft itself.
The review is complicated by the way Maersk Air Cargo is intertwined in the broader Maersk corporate structure and the outsourcing arrangement with Amerijet, according to Korean Air. It said it brought the arrangement to MOLIT’s attention because the Amerijet aircraft are painted in its partner’s livery, even though Maersk Air Cargo holds no traffic rights in Korea, and the companies presented confusing information about which legal entity within Maersk hired Amerijet.
For 20 years, Maersk operated Star Air, which provided outsourced airlift to UPS and other parcel organizations. Maersk Air Cargo was incorporated in early 2022 as a subsidiary of Maersk Aviation Holding A/S when Maersk decided to expand the use of the cargo jets, and acquired a large German airfreight forwarder, to move goods for its own customers. Star Air was rolled into the air operator’s certificate Maersk Air Cargo. Amerijet identifies its commercial partner as Maersk Logistics & Services International.
Korean Air argued it is natural for MOLIT’s review to take longer because the Amerijet case is unprecedented in the Korean air cargo market and Maersk has touted itself in marketing campaigns as providing the airfreight service between Korea and the U.S. It said the partners have obscured the exact nature of their relationship with misleading and incomplete information.
“Amerijet is seeking to implement (for the South Korean market) a novel arrangement … that has apparently been accompanied by great confusion thanks to its commercial partner’s public statements and course of conduct,” Korean Air said in its response.
Amerijet has had a difficult year because weak market conditions have sharply reduced revenue. Tim Strauss was abruptly replaced as CEO by the company’s CFO in early October. The company said Strauss resigned, but sources say he was fired because expenses were out of line with revenue and morale was poor.
More FreightWaves/American Shipper stories by Eric Kulisch.
Write to Eric Kulisch at ekulisch@freightwaves.com.
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