China Airlines Ltd (CAL, 中華航空), Taiwan’s largest carrier, yesterday said it is mulling creating a new budget airline with a final assessment to be finalized by the end of the year.
That will make China Airlines the first local carrier to operate a low-cost carrier (LCC).
Facing tougher competition from budget airlines globally, the carrier said it should also keep an proactive attitude toward the issue of establishing a new LCC.
“Everyone is doing it,” CAL chairman Sun Hung-hsiang (孫洪祥) told reporters after the opening of the Taipei International Travel Fair yesterday.
Sun said the company is considering various ways to form a new budget airline, either by itself or in cooperation with other partners.
In addition, establishing a new budget airline, or transforming Mandarin Airlines (華信航空) — a subsidiary of CAL focusing on domestic and cross-strait passenger routes — into a LCC, may both be options, the carrier said.
Under the current limitations set by the Ministry of Transportation and Communications (MOTC), the minimum annual operating revenue for a company willing to operate an international airline is set at NT$6 billion (US$203.76 million), which would be “no problem at all” for CAL, Sun said.
However, once CAL decides to enter the LCC market, it may need extensive fleet expansion to raise its total transport capacity, Sun added.
For the carrier’s business this quarter, Sun said passenger demand may remain strong on the back of momentum driven by the travel fair.
In the first nine months of the year, consolidated sales stood at NT$104.6 billion, down 1.31 percent from a year earlier, CAL statistics showed.
The firm aims to sell more than 10,000 sets of tour packages at the travel fair this year, nearly doubling the 5,000 to 6,000 sets sold at the same fair last year, Sun said.
The four-day travel fair — which opened yesterday and will run through Monday — has 1,350 booths at the Taipei World Trade Center, with 900 stands from 60 countries or areas.
The fair, organized by the Taiwan Visitors Association (TVA, 台灣觀光協會), is expected to draw a record-high 280,000 visitors this year. Last year, the event attracted a total of 260,000 visitors, with NT$1.5 billion of tour packages sold during the four-day fair.