Taiwan-China direct flights from July 2008

The first regularly scheduled flights between Taiwan and mainland China in five decades is likely to take off as early as in July 2008.

Chinese carrier Air China Limited, the world’s largest airline by market value, plans scheduled service to Taiwan as soon as it is allowed, the website bloomberg.com has reported.

The Beijing-based Air China Limited has 234 aircraft, almost double the combined fleets of China Airlines Limited and EVA Airways Corporation, Taiwan’s biggest and second-biggest carriers, respectively.

With the introduction of scheduled flights between mainland China and Taiwan, passengers from Taiwan will be able to connect to the business centres of northern mainland China such as Dalian and Qingdao from Air China’s hub in Beijing, the website bloomberg.com quoted an analyst in Taipei as saying.

“It will be hard for Taiwanese carriers,” the analyst said, “to get approval to fly domestically in the mainland. Air China has the power, and if they cut prices aggressively, that will erode the profits of Taiwanese airlines.”

Shares of China Airlines Limited had soared to a four-year high of NT$19.30 (64 US cents) on March 24, 2008, the first day of trading after Ma Ying-jeou won Taiwan’s presidential election on March 22 and pledged to allow direct flights to mainland China.

Ma Ying-jeou is to assume office as President of Taiwan on May 20, 2008.

Taiwan restricted direct links with the mainland since the Kuomintang retreated to the island in 1949 after losing China’s civil war to the Communist Party.

Taiwan banned regular direct transport links with mainland China because of a dispute over sovereignty. Though mainland China considers Taiwan as a part of its territory, the two have been administered separately since 1949.

At present, cargo and passengers bound for China must transfer in a third destination such as Hong Kong or Macau – this taking three times longer than direct services across the 150-kilometre (93-mile) Taiwan Strait.

Now only charter flights during Chinese holidays are allowed between Taiwan and the mainland. And, these flights are required to make a detour into the airspace of a third country before landing in China.

Direct air links between Taiwan and the mainland China, according to analysts, may double the number of cross-strait passengers to 16 million annually, in turn, raising China Airlines’ earnings per share considerably.

According to a report in the Taiwanese newspaper China Post, the direct flight services – one of Taiwanese President-elect Ma Ying-jeou’s main election campaign policies – are expected operate initially on weekends, to be expanded later to daily flights by the end of 2008.

According to unofficial estimates, about 4 million Taiwanese visit China annually, with 70% of them travelling through Hong Kong, making the route a “golden route” for carriers on account of its high load rate and revenue.

China Post reported Ringo Chao, chairman and president of China Airlines Limited, as saying that China Airlines, Taiwan's largest carrier, is planning to reduce its services between Taipei and Hong Kong when daily direct flight services are implemented.

China Airlines is one of the largest carriers on the Taiwan-Hong Kong route, second only to Cathay Pacific Airways.

On how China Airlines will adjust its operations vis-à-vis direct flights, Chao said “matters such as flight destinations and frequency can only be decided by the related authorities of Taiwan and China.”

Eric Lin, manager of the public affairs division at EVA Airways Corporation, Taiwan’s second-largest airline, was quoted by China Post as commenting on the proposed direct flights: “EVA Airways will deal with the changes after the new government issues directives on direct flights.”

Lin said an estimated 1 million passengers fly with EVA Airways to Hong Kong a year, and about 50% to 70% of them then transfer to China.

EVA Airways operates 8 daily flights between Taipei and Hong Kong, 4 flights between Taipei and Macau, and another 2 flights between the southern port city of Kaohsiung and Macau.

 

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