Move May Pave Way For Future Full Direct Service Between Taiwan
A political thaw
attributed to warming relations between China and Taiwan may soon
open new routes to mainland Chinese cities for Taiwanese carriers
barred from operations for years due to political tensions between
the two nations.
BusinessWeek reports China Airlines made a move toward ending
Chinese mainland isolation as Ringo K.S. Chao, the chairman of the
Taiwanese carrier, signed a memorandum of understanding in the
Chinese city of Guangzhou with China Southern Airlines Chairman
Shao-Yong Liu in an initiative to boost cooperation between the two
In another move, China amended a restrictive policy to allow new
routes from Taiwan to the mainland to develop. Formerly allowed to
only fly charters from Taiwan to China for special holidays such as
Chinese New Year, Taiwanese carriers China Airlines and EVA Airways
will begin regular weekend charter service on July 4 over the
Taiwan Strait between five Chinese cities and eight Taiwanese
cities. The service will only be allowed from Friday to Monday and
will still need to fly over Hong Kong, a special administrative
jurisdiction, before continuing into China.
Even with the detour, Taiwanese airlines still believe the new
routes will be profitable based on past performance with the
holiday charters. The new routes may help deflect massive losses
the airlines incurred from unprofitable international routes and
rising oil prices. China Airlines posted an $84 million loss last
year and another $98 million loss in the first quarter of 2008. EVA
Airways was right behind when it reported a $62 million loss in
2007 and a $75 million loss in the first quarter of 2008.
In a further move, Beijing has agreed to chartered flights to
five more Chinese cities and double the number of cross-strait
flights to 72 a week after the Olympics. Both sides hope to take
advantage of this new freedom and plan to hold further talks within
the next three months addressing an increase in the frequency of
charter flights and direct cargo flights.
Negotiations with China
to allow direct flights to mainland cities, instead of taking the
detour over Honk Kong, may also help to improve the bottom line for
the struggling Taiwanese carriers. Morgan Stanley estimates the
carriers could save at least 70% on fuel costs per trip if the Hong
Kong provision was removed. "If they can do direct links, it
mitigates the loss that they would have otherwise," says Chin Lim,
an aviation analyst with Morgan Stanley.
Optimists feel the recent movement may open the doors for full
service direct flights by the end of 2009.
"We should negotiate as
quickly as possible direct flight routes and establishing air
control procedures for direct flights," said Yu Fang Lai,
vice-minister of Taiwan's Ministry of Transportation and
Communications, told journalists in Beijing on June 13, when the
two sides announced the July 4 date.