Thu, Sep 22, 2011 page11

• Carriers eye fruits of skies pact

  DESTINATION JAPAN: The signing of an open-skies agreement between Japan and Taiwan would help boost revenue and profits for local airlines, CAL and EVA said

  • By Amy Su / Staff Reporter
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  China Airlines Ltd (CAL, 中華航空) and EVA Airways Corp (EVA, 長榮航空) shares rallied yesterday on the local bourse on the news that Taiwan and Japan will soon be signing an open-skies agreement.

  Both airlines closed limit-up, with CAL, Taiwan’s largest air carrier, surging NT$0.9 to NT$14.2, while EVA Airways, the nation’s second-largest air carrier, rose NT$1.1 to NT$17.35, according to data from the Taiwan Stock Exchange.

  “The strong buying of CAL and EVA shares showed that investors’ optimism toward the -aviation agreement since Japan has served as one of the major destinations for the two carriers,” Hua Nan Securities Co (華南永昌證券) analyst Henry Miao (苗台生) said, referring to the 47.2 million CAL shares and the 24.75 million EVA Airways shares that changed hands yesterday.

  LIBERALIZATION

  “Once commercial aviation services are further liberalized, revenue in both passenger and cargo flights is expected to increase accordingly,” Miao said.

  It was reported that Mitsuo Ohashi, chairman of the Japan Interchange Association, who is scheduled to visit Taiwan, would sign an open-skies agreement during the trip to help boost bilateral commercial aviation exchanges between the two countries, although the reports were dismissed as rumor and denied yesterday by the Ministry of Foreign Affairs.

  All Taiwanese air carriers could apply to operate scheduled services to 10 Japanese destinations except Tokyo under the agreement, according to the Civil Aeronautics Administration.

  “This would help increase our [CAL’s] revenue and profit, as Japanese routes are important drivers for the company,” CAL -spokesman Hamilton Liu (劉國芊) told the Taipei Times by telephone.

  Following the signing of the agreement, CAL plans to launch new routes as well as increase its number of flights to Japan according to demand, Liu said.

  FLEXIBILITY

  EVA spokesperson Nieh Kuo-wei (聶國維) also welcomed the planned open-skies agreement, saying that the company would carefully evaluate the necessity of launching more flights to and from Japan.

  However, the signing of an open-skies agreement might put more pressure on CAL and EVA Airways as it could encourage more competitors to enter the market, a brokerage house said in a research note yesterday.

  “Although the opening may make the two air carriers’ operations more flexible, it would lead to lower tickets prices amid increasing flights and competitors,” Capital Securities Corp (群益證券) said.

  Smaller air carriers, such as TransAsia Airways Corp (復興航空) and Mandarin Airlines Corp (華信航空), would benefit the most by expanding into the Japanese market following the signing of the agreement, the local brokerage said.

  CAL and EVA are currently the only two Taiwanese air carriers to fly Japanese routes.

  Their passenger load factor on Japanese routes was 80 percent for the past three months, data showed.

  Additional reporting by CNA
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