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Airlines upbeat over links

Local air carriers are looking forward to the official decision on the opening of direct cross-strait transportation links that may be implemented by the end of next year, saying they are fully prepared to take part in the business.

"We're well prepared," said Roger Han (韓梁中), spokesman of China Airlines Co (華航), the nation's largest air carrier. "We have had experience flying the Taipei-Shanghai route, and we also have close cooperation with various Chinese airlines."

Earlier this year, Taiwan allowed the nation's six airlines to offer indirect charter flights between Shanghai and two cities in Taiwan. The airlines transported over 1,000 China-based Taiwanese business-people for the Lunar New Year's celebration. All flights were required to transit through Hong Kong or Macau.

The implementation of charter flights have paved the way for tangible progress toward direct transport links across the Taiwan Strait, said Michael Lo (樂大信), chairman of the Taipei Airlines Association (台北市航空運輸公會). With their previous experience, all six airlines are capable of conducting direct air links, he said.

The Cabinet yesterday unveiled a 64-page report regarding direct transport links with China. The report is based on the premise that China's big international gateways of Shanghai, Guangzhou, Beijing, Xiamen and Shenzhen would be opened to traffic originating from Taipei and Kaohsiung in the initial stages. However, all flights are required to make a detour around the Taiwan Strait for the sake of national security, the report said.

"I think [that particular] requirement won't have a major impact on our operations," said Nieh Kuo-wei (聶國維), spokesman of EVA Airways Corp (長榮).

"The proposed measure already saves time and fuel for air or sea carriers, because we won't have to make a transit via a third location," Nieh said.

The Cabinet's report estimated that overall, air passengers can save a total of 8.6 million hours and NT$13.2 billion on travel fares only one year after the direct transport links are in place. In addition, the time for goods to be shipped by air could also be reduced by 260,000 tonnes per hour, with a savings of NT$810 million in cargo rates for customers.

As for the benefits to the shipping industry, the report said the transport time will be cut in half, creating savings of NT$820 million for cargo carriers.

"The shipping sector will be enthusiastic about this report," Vice Transportation Minister Tsai Duei (蔡堆) said yesterday.

"Aside from savings in time and money, the lifting of the ban on cross-strait direct links will greatly enhance the efficiency of goods-distribution, further strengthening Taiwan's status as a transfer post in Asia," the vice transportation minister said.

While the breakthrough in cross-strait traffic is good news for both sides, Hong Kong carriers, namely Cathay Pacific Airways Ltd (國泰) and Hong Kong Dragon Airlines Ltd (港龍) that carry the most Taiwan-China travelers, are expecting to see losses of as much as 33 percent and 48 percent of their base profits from direct links during the first three years after the policy is implemented, according to Christopher Smith, an aviation industry analyst at Primasia Securities Co in Taipei.

By contrast, Taiwanese airlines such as China Airlines and EVA Airways, as well as several Chinese carriers, including China Southern Airlines Co (中國南方), Air China (中國航空) and China Eastern Airlines (中國東方), may enjoy substantial gains following the implementation of direct air links, Smith said.

He said China Airlines and EVA Airways appear to be the likely beneficiaries of the links, with annual incremental earnings gains of NT$5.4 billion and NT$4.2 billion respectively, during the first stage of direct links.
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