CAL traffic recovers on economic upturn and China flights

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A sharp upturn in economic activity from the final quarter of 2009, coupled with a strong start to direct flights between Taiwan and China from August, have resulted in a "surprising" but welcome traffic recovery by China Airlines.

Cargo revenue at the Taiwanese carrier in November 2009 was 200% greater than that at the bottom of the market the previous year, said Philip Wei, chairman of CAL. At one stage, it grounded three of its 20 Boeing 747-400F freighters as cargo volumes plummeted. All, however, are now back in service.

Passenger traffic also began picking up in the final quarter and the airline made money for the three-month period to the end of December. That is not enough for the carrier to return to the black for the year, says Wei, who is however hopeful that CAL will make money this year.

"In 2010, if the oil price can keep at its current level, we will make money but I cannot tell you how much," he adds. The carrier's budget assumes oil will cost $75 a barrel on average this year.

A major boost for CAL in 2009 was the start of new scheduled flights across the Taiwan Straits, linking several Taiwanese cities with cities in mainland China. Direct scheduled flights had not been allowed for years due to the strained political ties between China and Taiwan.

Those restrictions were lifted last year and in August, airlines from both Taiwan and China have been allowed to operate direct flights. "The [traffic] situation has been even better than we expected," says Wei.

CAL has been reporting load factors of nearly 80% on its services to 13 destinations in China. These services now make up about 10% of CAL's total revenues, says Wei, who would like more route opportunities.

"We wish we could have further negotiations [between the two countries] so we can add more destinations and more frequencies," he adds.

The airline already uses some of its Boeing 747-400s on what are now trunk routes to China, such as Taipei to Shanghai, and is upgrading other services from 737-800s to Airbus A330s because of the strong demand, said Wei.