Local airline companies may not greatly benefit from an increase in direct passenger flights and new cargo services between Taiwan and China amid improving cross-strait trade ties, analysts said yesterday.
Local carriers expect flights to China to double to at least 72 a week as direct transportation is expected to top the agenda of this week’s cross-strait talks. The nation’s five local airlines will each be able to provide one extra flight per day if that expectation is realized.
“Expanding passenger services, which will complete one of President Ma [Ying-jeou’s (馬英九)] campaign promises, will increase each firm’s share of the business and allow for shorter routes, which translates to fuel savings and possibly ticket savings for passengers,” Charles Ma (馬嘉禾), an airline analyst at SinoPac Securities Corp (永豐金證券), said via telephone yesterday.
The caveat lies in what demand there will be for cross-strait flights. Even the airlines are unable to provide precise estimates, he said.
“Just look at the demand for current weekend charter flights; how will increasing the number of flights and increasing the number of locations help with a basic lack of demand,” Allen Tseng (曾炎裕), an associate manager of Capital Securities Corp, (群益證券) said via a separate telephone interview yesterday.
Tseng said an increase in passenger traffic would not significantly boost the net profits of local airlines in the short term in light of their deep losses in the first three quarters.
As for direct air cargo links, Tseng said in the current environment any type of increased traffic may not be good news for the capital-intensive industry, because of exorbitant fuel prices, airplane depreciation and high fixed costs.
Tseng estimates direct air cargo flights could at best contribute 3 percent of the total revenues of airlines. But with heavy losses reported by China Airlines Ltd (CAL, 中華航空) and EVA Airways Corp (EVA, 長榮航空) this year, such a contribution would be “insignificant,” Tseng said.
In addition, direct air cargo flights between Taiwan and China would notentirely replace the cargo businesses currently routed via Hong Kong and Macao.
“It does, however, put local carriers on equal footing with international air cargo companies, because it lifts the restriction of having to stop in Hong Kong or Macau before entering China,” Tseng said.
Airline stocks traded higher as Association for Relations Across the Taiwan Strait (ARATS) Chairman Chen Yunlin (陳雲林) arrived in Taiwan yesterday.
CAL and EVA stocks both edged higher on the Taiwan Stock Exchange, with CAL trading up NT$0.7 at NT$7.89 and EVA up NT$0.51 to close at NT$8.40.
SETBACK: Apple’s India iPhone push has been disrupted after Foxconn recalled hundreds of Chinese engineers, amid Beijing’s attempts to curb tech transfers Apple Inc assembly partner Hon Hai Precision Industry Co (鴻海精密), also known internationally as Foxconn Technology Group (富士康科技集團), has recalled about 300 Chinese engineers from a factory in India, the latest setback for the iPhone maker’s push to rapidly expand in the country. The extraction of Chinese workers from the factory of Yuzhan Technology (India) Private Ltd, a Hon Hai component unit, in southern Tamil Nadu state, is the second such move in a few months. The company has started flying in Taiwanese engineers to replace staff leaving, people familiar with the matter said, asking not to be named, as the
The prices of gasoline and diesel at domestic fuel stations are to rise NT$0.1 and NT$0.4 per liter this week respectively, after international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) announced yesterday. Effective today, gasoline prices at CPC and Formosa stations are to rise to NT$27.3, NT$28.8 and NT$30.8 per liter for 92, 95 and 98-octane unleaded gasoline respectively, the companies said in separate statements. The price of premium diesel is to rise to NT$26.2 per liter at CPC stations and NT$26 at Formosa pumps, they said. The announcements came after international crude oil prices
STABLE DEMAND: Delta supplies US clients in the aerospace, defense and machinery segments, and expects second-half sales to be similar to the first half Delta Electronics Inc (台達電) expects its US automation business to remain steady in the second half, with no signs of weakening client demand. With demand from US clients remaining solid, its performance in the second half is expected to be similar to that of the first half, Andy Liu (劉佳容), general manager of the company’s industrial automation business group, said on the sidelines of the Taiwan Automation Intelligence and Robot Show in Taipei on Wednesday. The company earlier reported that revenue from its automation business grew 7 percent year-on-year to NT$27.22 billion (US$889.98 million) in the first half, accounting for 11 percent
A German company is putting used electric vehicle batteries to new use by stacking them into fridge-size units that homes and businesses can use to store their excess solar and wind energy. This week, the company Voltfang — which means “catching volts” — opened its first industrial site in Aachen, Germany, near the Belgian and Dutch borders. With about 100 staff, Voltfang says it is the biggest facility of its kind in Europe in the budding sector of refurbishing lithium-ion batteries. Its CEO David Oudsandji hopes it would help Europe’s biggest economy ween itself off fossil fuels and increasingly rely on climate-friendly renewables. While
RSS