Taiwan carriers’ recovery heralds future competition

TAIWAN’S China Airlines (CAL) and EVA Airways both recorded high traffic figures in December, thanks largely to an upswing in cargo shipments.CAL made a 2009 high of US$358 million in sales for December, of which $157 million was from cargo. This was largely due to reduced volumes pushing up prices for freight to around $6 per kg.EVA made $246 million in December, with cargo sales reaching $94.33 million.
CAL certainly sees the December boost in sales as being permanent rather than a temporary seasonal blip.“There is potential for us to swing from loss [2009] to profit [2010] if the international economy continues improving,” said CAL’s chairman Philip Wei just before Christmas.
Sun Huang-hsiang, president, agreed, saying: “The worst has passed. We hope for a profitable 2010.”What CAL is hoping for is that the recently thawed cross-Strait relations will continue allowing it to muscle into EVA’s so far lucrative semi-protected network.“Airlines will benefit from rising demand if both sides forge closer air links,” said John Chang, CAL vice-president.An analyst at Gerson Lehrman agreed. He said: “EVA Air had long since reaped the benefits of being the only Taiwanese operator flying to Heathrow Airport. Alongside its extensive freighter operation, EVA Air has rarely had to look over its shoulder for China Airlines.“When the first China Airlines Airbus A340 touches down directly from Taipei, the management team at EVA Air should have already decided to abandon Bangkok as its stop-over for flights to Heathrow – EVA Air is operating a bigger, more fuel-efficient and modern airplane in the 777-300ER.“Irrespective of which airplane is being used, China Airlines has long since sought a path into Heathrow and now that it has the right of passage, competition will spark a price-war that can only benefit the customer.”