Tuesday, October 31, 2017

Drop in China-Taiwan Traffic Pressures China Airlines

A dwindling number of mainland Chinese tourists traveling to Taiwan has prompted the island nation’s flag carrier, China Airlines, to shift its attention to new markets. Speaking at the October 24-25 Association of Asia Pacific Airlines (AAPA) Assembly of Presidents in Taipei, CAL president Hsieh Su-Chien outlined his strategy to react to cross-straits tensions and a resulting 47 percent drop in passenger numbers between mainland China and Taiwan. During the same period, group traffic declined by 58 percent.

To counter the decline, CAL transferred most of its capacity originally planned for cross-straits services to Northeast and Southeast Asia in a bid to compete in both direct travel to or transit through Taiwan. He cited strong demand from Korea, and Taiwanese traffic to Japan has reached 5 million passengers annually.

“Our plans for key markets include continuing to aggressively develop the Southeast Asia market in support of the government’s New Southward Policy and maintaining the pressure in Northeast Asia,” he said. “We will also leverage our North America network and increase direct flights to all European destinations, resume London services and add more frequency to Southeast Asia, Northeast Asia and Australia.”

CAL took delivery of its first Airbus A350 almost a year ago, and has turned much of its focus toward Europe, where its services have averaged a load factor of some 90 percent. It plans to fly nonstop to London starting December 1. CAL senior vice president Steve Chang added that CAL maintains only a 22 percent market share to Europe, leaving 78 percent available for capture. Starting December 1, CAL plans to enter the so-called Kangaroo Route, flying direct to Sydney twice daily, and thereby using Taipei as a gateway to London. CAL expects eventually to establish a daily flight from Taipei to Auckland via Brisbane.

Perhaps counter intuitively, Chang revealed that the rise of mainline Chinese carriers has had minimal effect on CAL operations. “The business models are quite different, and they have strong demand from their domestic market,” he said. “There is some competition but there is more cooperation with these airlines...Since we are a SkyTeam alliance member with China Southern and China Eastern, we have numerous codeshares with them and complement each other’s strengths. Cooperation is very vibrant. There is little impact on the international routes, and passengers flying from Taiwan transiting to the U.S. and Europe via China is very little.”

Separately, new codeshare agreements with Philippines Airlines and Japan Airlines have increased passenger traffic on associated routes by some 8 to 15 percent.

Hsieh said CAL continues to evaluate its narrow-body aircraft options between the Airbus A320neo/A321neo or the Boeing 737 Max 8/9/10, and will make a decision based on pricing options for the engines and fleet requirements. CAL became an Airbus aircraft maintenance supplier in June, and offers MRO services for A320s to A350s.

(Chen Chuanren - AINOnline News)

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