Airlines Scaling Back

Economic News

22 Jul 2010
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Taiwan's Civil Aeronautics Administration (CAA) on January 28 approved a request by UNI Airways to end flights by March 1 between the northern city of Taipei and the southern city of Kaohsiung. This is the third approval for flight cancellations issued by the CAA since last August when Mandarin Airways cancelled its Taipei-Taichung flight and UNI Airways cancelled its Taipei-Chiayi route in October.

With the high-speed rail (HSR), known as the bullet train, running at capacity from one end of the island to the other since last March, airlines have suffered losses and have begun dropping unprofitable flights. The bullet train currently takes passengers from Taipei to Kaohsiung in 90 minutes for about $40. In comparison, flights are about twice the price and take about 50 minutes, not including airport check-in time.

Despite cutting air ticket prices by 50% last September for the Taipei-Kaohsiung route, UNI, a subsidiary of EVA Airways, was unable to maintain its two daily round-trip flights, but will continue operating between Taipei and Hengchun and Taipei and Pingtung.

The CAA reported this week that UNI carried 9890 passengers last year, accounting for only about 15% of the total for the same period in 2006. The airline reported its loss on the route last year totalled T$140m ($4.4m).

Additionally, local media reported that privately owned Far Eastern Air Transport (FAT) submitted an application in December to end its Taipei-Tainan flight by April 1 while Mandarin, a China Air subsidiary, has recently requested to stop flying its Taipei-Tainan route.

Having been aware since 2000 the HSR would eventually begin operations, airlines were biding their time in anticipation of the opening of cross-strait flights to mainland China. Some adjusted their prices early on in hopes of sustaining operations until the China flights became a reality.

However, soaring gas prices and stagnating incomes are transforming Taiwan's transportation trends. According to a study by the Taipei city government earlier this month, nearly 25% of the people surveyed had switched to public transport from personal cars and airlines in 2007 due to rising costs for fuel and tickets.

Lin said these factors should not effect passenger transportation on the wider scale. While airlines operating in Taiwan seem to be suffering dwindling numbers due to public transportation, their parent companies are restructuring their routes to meet international demand and expand their markets.

Starting March 30, EVA Airways said it would launch a Taipei-Osaka-Los Angeles route with three flights a week. Eventually, the number of flights between Taipei and Osaka is expected to rise from the current seven to 10.

EVA Air currently provides 63 flights a week to six destinations in Japan, including Tokyo, Nagoya, Fukuoka, Sapporo, Sendai and Osaka.

One area of particular promise for the airlines in Taiwan is the possibility of cross-strait flights. Officials on both sides of the strait agreed, in June 2006, to allow charter flights to operate during the holidays. It is expected that following the March 22 presidential election in Taiwan, talks will begin in earnest regarding direct flights across the strait.

Earlier this month, a senior official from China's Taiwan Affairs Office said Beijing would continue to push for the development of cross-strait travel this year.

Allowing more flights would certainly give airlines in Taiwan the ability to provide flights further afield and make up for their losses closer to home.

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