Sun, Aug 20, 2006 - Page 11 News List

Bullet train prompts Far Eastern Air to go abroad

MARKET FORCES The air carrier is expanding operations overseas ahead of the opening of the high-speed railway and as the domestic travel sector keeps rapidly shrinking

AP , TAIPEI

Faced with a shrinking domestic market and the imminent launch of a high-speed train linking the nation's main cities, Far Eastern Air Transport Corp (遠東航空) is actively expanding its overseas routes, an executive of the Taipei-based airline said.

Philip Chen (陳尚群), president of Taiwan's largest domestic carrier by market share, told Dow Jones Newswires that the new bullet train could grab as much as 50 percent of the traffic on the airline's two busiest routes, Taipei-Tainan and Taipei-Kaohsiung. Those two routes accounted for about 40 percent of Far Eastern Air's revenue last year.

The train is expected to begin operations in late October, and promises to transport passengers between Taipei and Kaohsiung, the nation's second-largest city, in just 90 minutes -- not appreciably longer than the 45 minutes it takes to fly.

If that's not bad enough, Taiwan's domestic travel market is shrinking rapidly as the nation's businesses move their manufacturing operations overseas.

"The domestic market shrank almost 50 percent in the past 10 years as more and more Taiwanese fly to China on business instead of locally," Chen said.

Taiwanese investors have poured more than US$100 billion into China since the early 1990s. Last year, bilateral trade stood at about US$80 billion.

In order to capitalize on traffic with China, Far Eastern Air operates three daily flights to South Korea's southern resort island of Jeju, cooperating with China Eastern Airlines Corp (東方航空), which provides two flights per day from Jeju to Shanghai and one to Beijing.

Passengers traveling between Taiwan and China have to transit in a third location, typically Hong Kong or Macau.

"Flying to Shanghai via Jeju saves about 1.5 hours compared with flying via Hong Kong," Chen said, adding the airline would start another daily flight to the South Korean island next month.

Chen said the company may add more daily flights to Jeju by the end of the year. It's also targeting South Korean tourists that use Kaohsiung as a transfer point on their way to Cambodia and Thailand.

On the cargo side, the airline has a single Boeing B757-200 cargo freighter, running five flights per week to Cambodia's capital, Phnom Penh, and two weekly flights to the Pacific nation of Palau, importing tuna fish.

"We may add another Boeing cargo freighter, if and when cross-strait links become more open," Chen said.

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