In 1975, Steven Seson, an engineer at Kodak, USA, invented the world's first digital camera. It was a great invention to change history, but the company's reaction was unexpected. 'I am still doing well enough, but is it necessary to disperse the power into the unknown?' The consequences of not grasping the importance of digitization were terrible. In 2012, 37 years later, Kodak left 132 years of history and eventually went bankrupt. It was a tragedy caused by the lack of a sense of challenge and strategy toward a new market.
Experts predicted that rival Fujifilm ("Fuji") of Japan would follow a similar downfall. It was because Fuji also did not realize the importance of digitization. However, the experts' expectations fell well. Rather, Fuji grew more and more over time. How did this happen?
Films produced by Kodak and Fuji require'super-precision technology'. Nanotechnology that stably places particulates in multiple layers of thin film is key. However, in the process of utilizing this nanotechnology, the ingredient'collagen' that we often hear in everyday life is included. This is to prevent the film from being exposed to air and oxidizing.
Fuji focused on this. He was plunged into a new field that utilized this'collagen' before being pushed down by a huge storm called'digital camera'. It was the beauty and regenerative medical industry. It is a blend of know-how accumulated over 80 years in cosmetics production. The challenge was a hit. After that, he expanded his business to the field of health and life sciences, and Fuji was literally reborn. (※ The proportion of the film business, which was the core, fell below 1%.)
● "Only species that have been adapted to environmental changes survive."
Earlier, British biologist Charles Darwin preached deficit survival in his book The Origin of Species. It is not a weak diet that the strong man lives at the expense of the weak, but a'deficit ', that is, the theory that a species adapted to environmental change survives. These two companies, Kodak and Fuji, have shown that the key factor in determining survival is their ability to adapt to environmental changes.
From this'survival of the fittest' perspective, today and all over the world are facing great challenges. That's Corona 19. To the extent that history can be divided into'before and after corona', the corona19 virus has brought tremendous tangible and intangible changes to all humanity.
The most direct and powerfully affected sector is the'economy'. Many physical activities are limited right now, and the economy is forced to enter a recession. Among the various sectors, one of the industries that are particularly desperate is the aviation sector. This is because the borders around the world are blocked and virtually even planes flying and leaving are blocked. It is like a film industry that has slowly kneeled in the appearance of a digital camera, and is sinking.
● New challenges in the aviation industry, maintenance, repair and disassembly and assembly (M·R·O) business
Sometimes the crisis is a new opportunity. In a gloomy reality where the plane cannot even float, someone tries to'reverse'. 'Are airplanes flying in the sky, is it economically valuable? Couldn't we create added value through airplanes on land other than the sky?' There is a place where such worries gather and go together, so there is a new field of attention again. It is the aviation'M·R·O' business.
Aviation'M·R·O' is a concept encompassing maintenance, repair, and overhaul projects to support safe operation and performance improvement of aircraft. In other words, it is a process that helps the aircraft to maintain a good condition and to fly stably. More specifically, it is the process of making aircraft parts, assembling those parts to complete the aircraft, and maintaining and managing the completed aircraft so that the airline can continue operating safely. In other words, aviation M·R·O is not an aircraft manufacturing business, but a field of transportation service that is considered as'post-sale and post-management'.
Aviation demand is steadily increasing, and the M·R·O market for aircraft maintenance, repair, and management is bound to grow. The global aviation M·R·O market is expected to grow by an annual average of 3.7% to $99.7 billion this year. In 2030, ten years later, the market is expected to expand significantly to about 158 trillion won. It's a really fast-growing market.
Among them, our Asia-Pacific M·R·O market is about 30 trillion won this year, and is growing at an annual average rate of 6.5%. In 10 years, it is expected to grow to about 56 trillion won, 35% of the global market. As such, it can be interpreted that there are many planes to and from China, Japan, and Taiwan, including Korea. (Source: Oliver & Wyman)
Moreover, as mentioned above, the corona 19 is hitting the aviation industry with direct hits, and new aircraft are being delayed worldwide. It means that you don't buy a new plane, you fix existing ones, and you use them longer. The air transport industry was hit hard by the Corona 19 incident, but ironically, the demand for aviation M·R·O business is getting bigger.
● Aviation M·R·O business has emerged as the core business power of the nation.
So, airline powerhouses such as Singapore and the UAE, as well as the United States and Europe, are actively pursuing aviation M·R·O business. In the era of low growth caused by Corona 19, it is determined that aviation M·R·O business is a key driver to lead the national economy and is to provide strong support.
But we are different. In the meantime, aviation was basically regarded as a so-called'regulatory-oriented industry' and has been focused on safety and business management. This is in contrast to overseas construction, funded and financed, classified as a'promotion business', shipping business with a public guarantee of KRW 2,800 billion, and tourism with credit guarantee benefits.
Therefore , the share of Korea's'M·R·O' business in the global market is only 1.5%. Compared to 62% of U.S. and Europe and 21% of other Asian countries, it is a step ahead. One professor of business administration said, “To explain the M·R·O level of Korean airlines in soccer, it is the level of “Brazil National Team vs. Shooter”. 54%, 1.4 trillion won) are being repaired and repaired overseas. In addition to being inefficient, the treasury loss is enormous.”
※ In particular, Korean Air, the first nationality company, adheres to the self-maintenance principle to check against latecomer competitors LCC and increase barriers to market entry, and is lukewarm in investing and expanding domestic M·R·O projects. Most of the domestic airlines' maintenance organization certifications are concentrated in the field of flight maintenance, and especially in the case of engines, there are no heavy maintenance competency holders.
● "The actual economic effect wasted on political judgment" This
does not mean that we are not making efforts to foster aviation M·R·O. From 2009 to 14, the first was to ``promote maintenance and investment to strengthen the competitiveness of aircraft maintenance,'' and from the 15th to last year, the second was to ``strategic industrialization to enter the world's top 10 target for aircraft manufacturing and maintenance.'' Nevertheless, there were no specific achievements.
An official from the Korean branch of a global aircraft manufacturer criticized, "It is good to say that there is no scoring goal, and if you look cool, the gap with the world level is very large. It is a pity, shame, and dismay for the same Korean." Following "the world top 10 national gateway airport of the airport did not have an air operating properly maintained cluster is the only airport in Incheon, Republic of Korea. " He lamented it.
If so, what was the problem? From the conclusion , experts point out that the aviation M·R·O business was carried out based on political judgments, not economic and business efficiency. The aviation M·R·O business is much more than a service business, not just a manufacturing business. It is a business that needs to provide fast and high-quality services to customers, that is, airlines operating aircraft. Naturally, we had to try to ensure that our customers received high-quality services in a comfortable place. This is a common sense that is difficult to disagree with before discussing business administration.
But we couldn't keep that common sense. Previously, the Korean government promoted distributed development by region from the perspective of revitalization of local airports and balanced development of land rather than customer-oriented market economy principles. In other words, the aviation M·R·O industry was approached not from an economic and industrial point of view, but from a political point of view of consideration and concession. Invested redundantly in Busan, Sacheon, Cheongju, Yeongcheon, and Muan, leading to consumable competition and development difficulties. In the process, labor costs have more than doubled that of other Asian countries. It is in a sad situation that is pushed to the Philippines, Southeast Asia, and even Mongolia, which is pushing for low wage competitiveness.
●'M·R·O Investment Site' Sacheon, Gyeongnam, why are you failing?
In the meantime, the Ministry of Land, Infrastructure and Transport selected KAI Korea Aerospace Industry Co., Ltd. (KAI) in Sacheon, Gyeongnam as the government-supported aviation M·R·O operator. KAI has been promoting the business by creating a aviation maintenance specialist (KAEMS), which Korea Airports Corporation and low-cost airlines participate in. Defense industry company KAI was planning to expand the business area to civilian aircraft as well as military aircraft to make it a hub for aircraft maintenance in Asia.
However, KAI's performance so far has been less than expected. KAEMS, a aviation M·R·O corporation, has a weak order volume, and is currently leasing half of its current maintenance facilities to KAI from KAI, a major shareholder. (However, we plan to open a second overhaul at the end of this year.) This is basically because KAI had several weaknesses in promoting the aviation M·R·O business.
The key is that Sacheon, which is headquartered in KAI, is physically inaccessible. World airlines dragged the plane back to Incheon International Airport, and it was very burdensome to go straight to Sacheon, Gyeongnam, over 300km. Long travel distances and travel times are both'cost' for airline and aircraft manufacturers.
The lack of technical skills is also a weakness . KAI is a defense company and is based on manufacturing. However, the aviation M·R·O business is a kind of service business that post-aircraft management. The nature of the original work is different. As a result, it has no choice but to be inferior to other aviation M·R·O business competitors in the world. In fact, KAI is in a state where it is not possible to perform heavy maintenance except for the B737 heavy maintenance, which was certified last year. This is because they have not yet received international certification.
It is also pushed for price competitiveness. KAI is focusing on the'Gas Heavy Maintenance' business, which accounts for 70% of the labor cost. However, this is a labor-intensive field and does not require relatively high technical skills. So, developing countries such as Southeast Asia are aggressively targeting the market with powerful weapons such as cheap labor.
Let's think about it as a customer airline and aircraft manufacturer. 'Why should I drag the plane to Sacheon, Gyeongnam, where the distance is long, the technology is not excellent, and the labor cost is high?' Yes, that's right. Unfortunately, there is no reason to do so.
Eventually, the government failed to create a so-called'win-win strategy' in which many provinces won by raising the pie to create a drop effect. On the contrary, they made only the skit fighting to avoid losing each other's unmade pies. The government's strategy to prevent aviation M·R·O business from preventing local outflows and fostering a new growth-oriented export strategic industry in the future remains as a mirage without accomplishing so far. It is the current address of our M&R·O business today that we have faced a crisis without even seeing the results.
● "Once the operating area and the maintenance area are located in one place, it is possible to save money."
So, the discussion about creating an Incheon Myeong-Rong area with Incheon International Airport as an aviation M·R·O business complex is on the rise again. The goal is to create a complex business complex centered on Incheon Airport, which is a'national gateway' airport and a hub for Northeast Asia, to properly meet the rapidly growing demand for aviation M·R·O projects.
The situation of neighboring competitors is also not bad. China is already saturated with aviation M·R·O facilities that can be handled in the country due to a surge in aviation demand. Japan's aviation M·R·O business has been developed mainly for its own aircraft, so there is a limit to'scalability'. On the other hand, Incheon has 70 million international passengers and 1,100 super-large hub airports per day, so it can secure new M&R·O demand and volume.
In addition, as a complex logistics center such as sea and land, as well as aviation, it is advantageous to procure and transport parts necessary for the M·R·O business. Domestic airlines such as Korean Air, Asiana Airlines, and LCC are all gathered, and it is relatively easy to attract high-end IT and aviation maintenance personnel, especially near the Seoul metropolitan area.
In particular, with 70 million international passengers annually, it is possible to secure demand and volume for new aviation maintenance M·R·O by utilizing the world's 5th and 1,100 daily mega hub airport platforms. Moreover, Incheon Airport's international flights and passengers increased by 6.6% and 6.3%, respectively, even before Corona 19. By 10 years, passenger demand is expected to exceed 100 million per year.
Crucially, to cultivate Sacheon's aviation M·R·O industry, excluding the development of maintenance industry at Incheon Airport, the country's gateway, can be a threat to aviation safety. Koreans use Incheon Airport at an overwhelming rate when leaving the country, which can be a serious problem as it ensures the safety of aircraft. In fact, due to poor maintenance by airlines operating at Incheon Airport, the number of abnormal flights has increased by an average of 13% per year. Over the past 5 years, there have been over 5,000 cases of delays or cancellations due to insufficient maintenance at Incheon Airport.
For this reason, all of the world's major airlines and aircraft manufacturers who met during the interview process chose Incheon Airport as the best place for domestic M·R·O business. An official from a Korean branch of an aircraft manufacturer said, "It is important for us to be able to receive all the services in one place. If the place of service and the place of maintenance are separate, we have to spend unnecessary time and time. TAT (Turn Around) Shortening the time (time required for maintenance) is directly related to the cost. Why can't I go to Sacheon, Gyeongnam, because the cost is not reduced?"
● "It is psychotic to repeat the same method and expect different results."
Experts advise that the development strategy of the M·R·O business itself must be changed in order to develop the aviation industry. Specifically, it is necessary to create a large-scale cluster with global competitiveness to provide integrated one-stop service for aviation M·R·O at Incheon Airport, and Sacheon should be divided into the supply chain role for procurement of maintenance parts within the cluster of Incheon Airport.
In the future, if an excellent metropolitan rail network connecting to Incheon International Airport is established, the system can supply and procure parts between Incheon and Sacheon in three hours. In addition, there are opinions that it is desirable for Sacheon to specialize and cultivate M·R·O projects in the field of logistics instead of heavy maintenance.
In the opinion of experts, it seems that the passport also supports this strategy. On the 19th, Democratic Party Congressman Yoon Gwan-suk representatively proposed the'Incheon International Airport Corporation Act Amendment Act' to develop the aviation industry centering on Incheon. In addition to Rep. Song Young-gil, who served as Chairman of the Northern Economic Cooperation Committee, and Jung Il-young, who served as Head of the Aviation Policy Division at the Ministry of Land, Infrastructure and Transport, Jo Eung-cheon, secretary of the National Assembly's National Assembly, Kim Kyo-heung, Chan-dae Park, Dong-geun Shin, Dong-soo Lee, Seong-man Lee, Hong-geun Kang, Jun-hyun Kang, and Young-hee Kang. .
The proposed revision included a plan to further strengthen the foundation of the aviation industry centered on Incheon and further prepare for the'Post Corona' era by adding the objectives of Incheon Airport Corporation, such as support for aircraft maintenance and education and training projects. The aviation industry hit by the Corona 19 must be more competitive than simply carrying passengers and cargo to create higher added value.
The more people who can't achieve results, the more excuses. Rather than finding problems inside you, you often blame others or blame the world. Should I go to change the key that the car doesn't start? If the computer doesn't turn on, should I go to an orthopedic surgeon because of an abnormality in my hand? The reason why the car does not start or the computer does not turn on is because there is a problem inside.
"A psychopath is someone who repeats the same method and expects different results," Einstein said. If you want to change the results, you have to change them first. After Corona 19, we are facing a new world that we have never experienced before. The way you solve the problem should also be new to suit it. The best products are not always the best sellers. Only products that can meet the needs of the times and markets are not pushed away from the competition. We hope that our aviation industry will follow the path of Fuji to adapt to new environmental changes, not Kodak. We look forward to the emergence of the Korean aviation industry.