Fri, Mar 30, 2012 - Page 12 News List

EVA expects boost from Star Alliance

SYNERGY:The green-trademarked airline hopes to get a huge boost in revenue from the tie-up, with president Chang Kuo-wei indicating there may be an increase of NT$10 billion

By Amy Su  /  Staff reporter

EVA Airways Corp (EVA, 長榮航空), the nation’s second-largest air carrier, expects its passenger revenue for next year to grow 20 percent from this year, benefiting from its participation in the Star Alliance, a company official said yesterday.

The carrier announced yesterday that its membership application had been accepted by Star Alliance, adding that it would soon begin the integration process with the other members of the alliance. It expects the integration to be completed in the first half of next year at the latest.

The air carrier is scheduled to join the largest airline alliance in the world by the first half of next year.

“After careful evaluation, we concluded that Star Alliance offers the best match for us,” company chairman James Cheng (鄭光遠) said in the future membership signing ceremony held by EVA and Star Alliance.

EVA and Star Alliance will complement each other, Cheng said, adding that the company would expand the existing Star Alliance flight options in the growing cross-strait market.

EVA president Chang Kuo-wei (張國煒) said that the carrier’s move to join Star Alliance would raise its passenger revenue for next year by 20 percent from this year.

EVA posted NT$59.51 billion (US$2.01 billion) in passenger revenue last year, up 5.5 percent from a year ago, and marking its highest level ever. Chang indicated that passenger revenue might increase more than NT$10 billion next year.

The carrier’s expectations were substantially higher than the target set by its peer, China Airlines Ltd (CAL, 中華航空).

The nation’s largest air carrier, which joined the SkyTeam Alliance, the other major global airline alliance, in September last year, estimated that joining the alliance would boost its revenue by between NT$1 billion and NT$2 billion for this year.

“The significant synergy in both service enhancement and expansion of our customer base is expected to emerge once we officially become a member of Star Alliance,” Chang told the reporters after the ceremony.

Currently, EVA covers little of the Latin American, European or African markets, Chang said, adding that becoming a Star Alliance member would solve this problem.

As for cargo business, which was weak all last year, the company has begun to experience a slight rebound this month, with the launch of Apple Inc’s new iPad driving up demand, Chang said.

However, Chang said more time is needed to tell whether the momentum will continue for the rest of the year.

The carrier will sell two cargo freighters this year and delay the purchase of new cargo aircraft, he said.

Chang said he did not expect the company to earn a profit in the first quarter, because of weak cargo demand in the first two months of the year.

Also, rising crude oil prices are a major source of uncertainty this year, Chang said.

“Even if we impose a bunker surcharge to passengers, this can only make up for 50 percent of the company’s rising costs, which means we still have to digest the other half,” he said.

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