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Companies make contingency plans

With a US-led attack on Iraq likely to be launched today, local passenger airlines, air cargo carriers and shipping companies are on high alert and mapping alternative routes to avoid the possible war zone.

Both China Airlines Co (華航) and EVA Airways Corp (長榮航空) said yesterday that they may re-route their flights to London, Vienna and Amsterdam -- which fly over the Middle East -- to fly north of Iran or south of Saudi Arabia.

Re-routing of flights will extend flying time by 1.5 hours, the airlines said.

"Re-routing costs are expected to be a burden [on the company] depending on the rising oil and insurance prices as well as the area the war will involve," said Nieh Kuo-wei (聶國維), EVA's spokesman.

EVA currently operates 10 passenger flights and 12 cargo routes per week that overfly the Middle East while China Airlines operates two passenger flights and one cargo route that may also be affected by the war.

Hong Kong's Civil Aviation Department approved applications from eight airlines to levy a fuel surcharge for three months after oil prices rose. But domestic airlines have no plans so far to follow suit.

"We'll closely watch the war's development before any pricing changes can be decided," Nieh said.

But Calvin Chen (陳程坤), an analyst with Compass Securities Co, yesterday said that economic hard times will make it difficult for airlines to hike prices even if there is a war.

"To the disadvantage of the airline and shipping sectors, they may have to absorb the extra costs of fuel prices themselves instead of asking customers to pay," he said.

It appears that local shipping companies and express freight companies will be less impacted by the war.

Evergreen Marine Corp (長榮海 運) yesterday said that the company currently operates two routes to the Persian Gulf that make stopovers at Saudi Arabia's Dammam port. If the war is restricted to Iraq, there will be no impact on its operations, the company said, adding that cargo containers will be docked at the Dubai port if the Dammam port is affected by the war.

Yangming Marine Transport Corp (陽明海運) operates one route in the Middle East, but has bought extra war-risk insurance to ensure cargo safety, according to the senior project consultant, Winsor Huang (黃文哲).

Wan Hai Lines (萬海航運) serves nearly 20 ports in the Middle East. The company's spokesperson was not available yesterday to comment on its contingency plans.

Express companies including Federal Express Corp, DHL Taiwan Corp (洋基運通) and UPS Worldwide Logistics yesterday said their services would not be interrupted unless they are barred from the region.
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