MRO & Manufacturing
Korean Air and Busan Invest 200 Billion Won in Aerospace Facility
Korean Air and Busan commit 200 billion won to build a new aerospace plant for UAVs, aircraft parts, and military upgrades in Busan.
This article summarizes reporting by ChosunBiz. The original report may be subject to premium access; this article summarizes publicly available elements and public remarks.
Korean Air Lines and the City of Busan have officially signed a Memorandum of Understanding (MOU) for a 200 billion won (approximately $150 million USD) investment to construct a new drone and aerospace manufacturing facility. According to reporting by ChosunBiz on March 30, 2026, this agreement marks the largest aerospace investment the city has ever attracted.
The new plant will be situated within Korean Air’s existing Busan Tech Center in the Gangseo District. It is designed to serve as a multipurpose hub, focusing on next-generation commercial aircraft components, military aircraft upgrades, and advanced unmanned aerial vehicles (UAVs).
This development aligns with Busan’s strategic vision to establish a “Future Aviation Cluster” connected to the upcoming Gadeokdo New Airport, positioning the region as a central player in the global aerospace supply chain.
The planned facility will significantly expand Korean Air’s manufacturing footprint. Based on industry research data, the new plant will feature a total floor area of 52,892 square meters and will be constructed on a 36,363-square-meter idle site within the current Tech Center grounds. The existing Busan Tech Center, established in 1976, already covers an expansive 717,359 square meters and is recognized as Asia’s largest military aircraft maintenance facility.
The multipurpose plant will focus on three primary operational pillars: manufacturing AI-powered UAVs, producing structural components for next-generation civil aircraft, and conducting maintenance, repair, overhaul, and upgrade (MROU) services for military aircraft.
The signing ceremony was attended by key regional and corporate leaders, including Busan Mayor Park Heong-joon and Korean Air Lines Vice Chairman and CEO Woo Kee-Hong. During the event, corporate leadership emphasized the forward-looking nature of the project.
“This investment is a strategic decision to lead the global unmanned aircraft market and secure capabilities for next-generation aircraft manufacturing,” stated Woo Kee-Hong, Vice Chairman and CEO of Korean Air Lines.
Mayor Park emphasized the city’s commitment to the project, noting in public remarks that Busan will provide administrative and financial backing to ensure Korean Air serves as the anchor for the region’s future aviation cluster. While globally recognized as a commercial passenger airline, Korean Air operates as South Korea’s only fully integrated aerospace company. According to industry background data, the company has been manufacturing aircraft parts since 1977, supplying major aerospace firms like Boeing and Airbus with components such as 787 Dreamliner parts and A350 cargo doors.
The Aerospace Business Division has recently proven to be a highly profitable segment for the airline. This success is partly driven by substantial defense contracts, including a reported 1 trillion won project to upgrade UH-60 Black Hawk helicopters for the South Korean military.
Korean Air is aggressively expanding its footprint in the drone and artificial intelligence sectors. At the “Drone Show Korea 2026” held in Busan in late February, the company unveiled South Korea’s first physical AI-powered subsonic UAV, developed alongside U.S. defense technology firm Anduril Industries. Furthermore, the airline has made strategic investments in Pablo Air, a domestic startup specializing in swarm AI drone technology.
In the realm of Advanced Air Mobility (AAM), Korean Air is laying the groundwork for commercial air taxis. The company has partnered with Skyports for vertiport development and holds an exclusive arrangement to operate up to 100 “Midnight” eVTOL aircraft from Archer Aviation.
We view this 200 billion won investment as a critical physical manifestation of Korean Air’s strategy to diversify its revenue streams. By building a robust defense and technology portfolio, the airline is actively insulating itself from the traditional volatilities of the passenger travel market, such as fluctuating oil prices and exchange rates.
Furthermore, the timing of this MOU coincides with strong governmental backing for the sector. In March 2026, the Korea Aerospace Administration (KAA) announced a 200 billion won “New Space Fund” to support domestic aerospace companies. Korean Air’s expansion in Busan perfectly positions the company to capitalize on both regional infrastructure developments, like the Gadeokdo New Airport, and national strategic funding initiatives.
Korean Air is investing 200 billion won (approximately $150 million USD) in the new facility, marking the largest aerospace investment in Busan’s history.
The plant will be built on an idle 36,363-square-meter site within Korean Air’s existing Busan Tech Center in the Gangseo District. The plant will serve as a multipurpose hub to manufacture next-generation commercial aircraft parts, upgrade military aircraft, and produce future AI-powered unmanned aerial vehicles (UAVs).
Facility Specifications and Strategic Objectives
Expanding the Busan Tech Center
Leadership Perspectives
Korean Air’s Broader Aerospace Ambitions
Beyond Passenger Aviation
The Push into AI and Advanced Air Mobility
Market Context and Outlook
AirPro News analysis
Frequently Asked Questions
How much is Korean Air investing in the new Busan plant?
Where will the new aerospace plant be located?
What will the new facility produce?
Sources
Photo Credit: News1