TT: Are you considering setting up your own low-cost subsidiary like Singapore Airlines did?
Wei: No. The impact of the budget airlines is so far not very deep. Furthermore, we think our fares are already low enough, almost at the same level as those of the low-cost carriers. I am confident that we can offer competitive prices. Many foreign airlines used to compete for business in the Taiwan market but eventually pulled out because we had the ammunition we needed to undercut them.
But unlike foreign carriers that can fly to any destination in the world, China Airlines is restricted, for political reasons, to a limited number of destinations. So we must do whatever is necessary to beat out our competitors and survive.
TT: One high-profile issue for China Airlines is the possible privatization of the company, which many look at as a means of boosting the company's efficiency, but privatization has been delayed for years. Will privatization become a reality in the near term?
Wei: I'm not in position to comment on this issue, as the policy is determined by the government. Nevertheless, I don't think privatization would affect our current operations a lot.
TT: Some say that China Airlines' procurement decisions are more political than economic. Will this change after privatization?
Wei: I have to make it clear that we come under no pressure from the government when we make purchasing decisions.
We make procurement decisions based on meticulous evaluations, mainly focusing on economic effect. For example, we recently bought 16 Airbus 330-300s, 12 of which will replace our Airbus 300-600Rs, which must be eliminated in order to avoid increases in maintenance costs. In addition, the new planes have a higher capacity. That will benefit our cargo business.
Most importantly, the move will help to simplify our fleet, as the Airbus 330-300 is similar to the Airbus 340-300, a major model in our fleet. By reducing the types of aircraft we have, we can improve our cost controls even more than through training our pilots and maintenance crews. Decisions like this are made on the economic merits.
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