China Airlines

Taiwan election result to benefit Taiwan-China services as airlines expand services for New Year

This weekend’s re-election of a Chinese Nationalist Party (KMT) President in the Republic of China (Taiwan) is good news for airlines operating between Taiwan and the People's Republic of China.

Since non-stop cross-straits services began in 2009, airlines from both sides have profited from a relaxation in access, with steep gains in direct city pair operations.

There had been concerns that a loss by President Ma Ying-jeou would mean his liberal attitude to relations with the mainland would be reversed under a Democratic Progressive Party (DPP) government. It was President Ma’s influence that helped remove restrictions on direct flights.

The KMT’s win should more or less mean business as usual – and a continuation of the expansion of cross-straits air travel.

Star poised to boost presence in North Asian market with addition of EVA

Star Alliance is planning a key step forward in boosting its presence in the fast-growing North Asian aviation market by adding EVA Airways, Taiwan's second largest carrier. EVA will be mentored by Air China, which currently is the only Star member in greater China although Shenzhen Airlines is also now in the process of joining the alliance.

EVA's expected entry into Star follows the entry earlier this year of rival Taiwanese carrier China Airlines into SkyTeam, the largest alliance grouping in greater China and North Asia. Star is now striving to close the gap in North Asia between it and SkyTeam by adding multiple new members in greater China.

EVA executives early this year stated the carrier had submitted an application to join Star. EVA’s executive team, led by chairmen James Jeng, attended this week’s Star chief executive board meeting in Addis Ababa to further promote its application. Star’s existing members are understood to be in favour of EVA’s application and a formal announcement will be made in Taipei in the coming months. As the process of joining Star takes 18 to 24 months, EVA could formally join Star as early as 2013.

Airlines and airports feeling impact of global economic weakness with continued freight pressures

Airlines and airports are feeling the impact of the current global economic weakness and declining consumer spending in Europe, which is having a noticeable impact on air cargo volumes. Cargo traffic, which generated USD66 billion in revenue in 2010, has declined every month since May-2011, according to IATA upon the release of its Oct-2011 traffic results, with a 4.7% year-on-year reduction in cargo demand in Oct-2011 amid reduced manufacturing confidence and businesses switching to slower modes of transport.

“Cargo is the story of the month. Since mid-year the market has shrunk by almost 5% and this is far greater than the 1% fall in world trade. Air freight is among the first sectors to suffer when businesses confidence declines,” IATA director general and CEO Tony Tyler said. Meanwhile, Boeing CEO Jim McNerney separately stated the company has seen a softening of freight demand in recent months, describing the freight market as a “watch item”.

Sharp declines in profitability for EVA Air and China Airlines in 2011 but profits in 3Q

China Airlines and EVA Air, Taiwan’s largest and second largest air carriers by revenue and traffic respectively, have reported sharp declines in profitability in the nine months ended 30-Sep-2011 weighed down by the poor performance of the air cargo transportation sector. The third quarter, traditionally a stronger period for earnings for Taiwanese carriers, delivered profits for both carriers, with an operating profit of around USD34 million for China Airlines and of around USD82 million for EVA Air.

Net profits for China Airlines stood at around USD29 million in the third quarter, with a net profit result of around USD42 million for EVA Air, based on CAPA calculations. However, the weakness in the cargo transportation sector, driven by a slump in the electronics industry whose shipments rely on air cargo transportation services, has impacted the carriers. Continued pressure on the cargo segment is expected in the months ahead.  

China Airlines, Taiwan’s largest carrier, joins SkyTeam. Big impact in crucial North Asian markets

The SkyTeam alliance has taken another step forward in cementing its place in the fast-growing North Asian aviation market by adding China Airlines, Taiwan’s largest carrier and the world's seventh largest cargo carrier (by international scheduled FTKs - or eighth largest by total system FTKs), to the fold on 28-Sep-2011. China Airlines' entry comes just three months after China Eastern Airlines and Shanghai Airlines joined the grouping in Jun-2011. China Airlines will be the first Taiwanese carrier to join a global alliance, with rival EVA Air remaining unaligned.

China Airlines will become the 15th member of the SkyTeam airline alliance (see Appendix for full list of alliance groupings). By joining SkyTeam, the Taiwanese carrier will expand its international coverage nine-fold via codesharing to 926 destinations in 173 countries across 14,000 services from the current 1010 destinations in 29 countries.

TransAsia and UNI Air lead Taiwan's second tier airlines into new markets

Taiwan's airlines are gearing up for a boom in visitors from Mainland China. Taiwan’s Transportation and Communications Minister Mao Chikuo has urged Taiwanese carriers to purchase more aircraft before the number of Mainland tourists permitted to visit the island increases from 5 million presently to 10 million p/a over the next three to four years. While the demand will no doubt be captured predominantly by the nation's two major carriers, EVA Air and China Airlines, some of the nation's smaller carriers are also targeting rapid expansion in the months and years ahead on cross-Strait and near-international routes.