Taiwan

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”.

Taiwan’s EVA banking on more cross-Straits flights

Taiwan’s EVA Air aims to focus on further expanding its cross-Straits operation as it takes delivery of new narrowbody aircraft. Expansion of EVA’s relatively limited long-haul operation is unlikely as long as there is an opportunity to add capacity in the lucrative cross-Straits market.

EVA chairman, James Jeng states the carrier expects to direct most additional capacity in 2012 to mainland China routes. Speaking to CAPA along the sidelines of last week’s Association of Asia Pacific Airlines (AAPA) meeting in Seoul, Mr Jeng says EVA is not planning to further expand its network in mainland China beyond the 25 destinations it will serve by the end of this year. But he says EVA hopes to increase frequencies to several existing destinations.

Capacity on existing cross-Straits flights will also increase as EVA introduces A321s. Mr Jeng says the carrier has committed to acquiring 14 A321s, with the first three to be delivered from leasing companies in late 2012. The EVA group, which includes subsidiary Uni Airways, plans to use the A321s in its cross-Straits network.