China Airlines Ltd (CAL, 中華航空) chairman Ho Nuan-hsuan (何煖軒) yesterday voiced concerns about limited time slots in busy skies, as a new airline prepares to enter the market.
Ho said that Starlux (星宇航空), an airline set up by former EVA Airways Corp (長榮航空) chairman Chang Kuo-wei (張國煒), would be entering a highly saturated market and intensifying competition in Asia.
While aircraft and air traffic rights agreements can be easily acquired to set up new airlines, carriers need to secure enough runway time slots to ensure long-term viability, Ho said, adding that favored time slots are limited.
Photo: CNA
“Existing agreements on time slots were forged over lengthy discussions between carriers and regulators, and airlines are not likely to give them up, at least not CAL,” Ho said at a news conference in Taipei.
Given the scarcity of ideal time slots, new entrants could face difficulty establishing viability if they can only offer red-eye flights, Ho said, adding that he is neutral on whether regulators approve Starlux.
However, Ho, who is also chairman of the Taipei Airlines Association (TAA), said that the association has sent a statement to the Civil Aeronautics Administration (CAA) urging against over-deregulation that could disrupt the market’s supply and demand balance.
While the CAA has been open with foreign carriers, some of the regulator’s counterparts abroad have taken a protectionist stance, Ho said.
Despite standing air traffic rights agreements, CAL’s requests for additional time slots were rejected by airports in Incheon, South Korea, as well as Shanghai and Hong Kong.
Securing ideal time slots would allow CAL to capture business from passengers taking transfer flights on long-haul routes, Ho said.
Transfer passengers from New Zealand and Australia help ensure profitability for flights to London, as traffic from Taipei alone cannot fill aircraft, Ho said.
For those passengers, the ideal time slot would have their flights take off in the evening to arrive early on the following day.
Since 2007, the number of Asia-based airlines has surged to 148, leaving little room for mistakes in the hyper-competitive market, in particular in decisions on fleet updates and capacity adjustments, Ho said.
However, Ho gave an upbeat outlook on CALS’s earnings in the second quarter, on the back of improving sales at the company’s cargo business, while a number of subsidiaries returned to the black.
Mandarin Airlines (華信航空) became profitable in April, while Tigerair Taiwan (台灣虎航) posted steady monthly sales growth.
The company has not yet released its earnings result for last quarter.
In related news, CAL’s second Airbus A350, decorated with the Formosan blue magpie logo, made its maiden voyage from Taiwan to Vancouver, Canada, on Tuesday.
The new route added a destination to the company’s network of A350 flights to North America, which include Los Angeles, New York and San Francisco.
CAL has ordered 14 A350s, seven of which have been delivered, with the remaining aircraft scheduled to be completed by next year.
CAL has also upgraded its fleet with 10 Boeing 777-300ERs, expanding its passenger carrying capacity.
Additional reporting by CNA
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