• News
  • Taiwan hopes for Strait gains

Taiwan hopes for Strait gains

Chinese and Taiwanese carriers are hoping for major benefits from the further loosening in restrictions on flights between the two, under which the first scheduled non-stop flights will begin.

The new flights mark the latest step in the phased opening of the aviation market between China and Taiwan. The drip-feeding of rights has already seen the start of regular charter flights between China and Taiwan last summer. Now a raft of new direct flights begin in August. China has designated rights for its 135 weekly passenger non-stops across nine airlines, while five Taiwanese operators have been given rights by Taiwan.

The potential market for China-Taiwan non-stop flights is huge. The agreement allows for 270 passenger and 28 cargo non-stop flights a week. But this is still insufficient to meet market demand and is small relative to the curent one-stop services. Hong Kong is the major stopover point with 313 passenger flights per week to Taiwan, according to Innovata data.The two other major links are Macau and the Kinmen island with 139 and 252 weekly passenger flights respectively.

China Taiwan flights (200) Rex Features 
 ©Rex Features
Figures from the Taiwan operators already serving China with regular non-stop charter flightsindicate tourism will be a key driver of traffic. EVA Air president Jeng Kung-yeun says prior to Marchonly 10-15% of those on its non-stop flights were tourists. But since March it has increased to 20%. It is "not just tourists from this [Taiwan] side, but more importantly, that side", he says.

China Airlinespresident Sun H H says about 30% of the nearly 215,000 passengers carried on its non-stop charter flights between January and April were mainland Chinese. The remaining 70% were Taiwanese, overseas ­Chinese and foreigners.

The new routing provides huge time and fuel savings at an operational level. For example, Jeng says the most popular route, Taipei-Shanghai, takes five hours via Hong Kong but only one hour and 20 minutes non-stop.

Carriers have come under fire from Taiwan's Civil Aeronautics Administration for charging a premium on these routes; for example a Taipei-Shanghai return costs around $525, almost a fifth higher than a flight via Hong Kong. But the airlines argue the free market should set the price and if governments want lower prices they should allow more flights.

Tourism Boost

Carriers also argue they have been catering to price-conscious consumers with promotions on the one-stop services. Indeed more tourist traffic has helped offset falling business traffic on Hong Kong and Macau flights. Jeng says when the regular non-stop charter flights started, EVA's passenger load factor to Hong Kong dipped from 74%. Tourist traffic though has since helped it recover and stabilise at around 72%. EVA also operates to Macau and has increased load factor to 76% from 69% last year. Jeng attributes the higher loads to southern China residents visiting Taiwan.

Sun at CAL says the carrier's passenger load factor in the first quarter on the Hong Kong route was approximately 64% which is lower than the 2008 average of 71%. But he points to a decision in April by mainland China to permit authorised travel agents to organise group travel to Taiwan. "It boosted passenger volumes not just on cross-Strait flights but also on Hong Kong flights," says Sun. "The load factor in April reached 80%."

But while the opening of non-stop passenger flights has been a boon for Taiwanese and Chinese carriers, it is not all plain sailing. In particular Taiwanese carriers are suffering on the cargo front. CAL has already parked three Boeing 747-400 freighters and cargo revenues for the first four months of 2009 are down about 40%, says Sun. EVA has parked two 747-400 freighters and a Boeing MD-11 freighter, says Jeng, adding it has delayed converting two 747 combis into freighters.

Taiwan is a major player in air cargo because of its manufacturing sector. But many Taiwanese manufacturers have been moving factories to China. The rise of Chinese cargo carriers means the Taiwanese-owned factories in China are exporting direct from China rather than sending goods via Hong Kong to Taiwan for export.

Taiwan hopes that the new non-stop cargo flights would aid its cargo operators were hit when China said goods on Taiwan-bound flights are for consumption in Taiwan only and are not for export to other countries. "We hope that this will be a temporary regulation," says Jeng, adding if this rule is lifted then Taiwan can be an air cargo hub. Sun also cites this as a major issue and says he believes both sides can resolve it.

Another issue is pilots and cabin crew need to have a Chinese visa. EVA's Jeng says the best solution is for China to be on the general declaration list, a list of countries crew may travel to without needing to have a visa.

China Taiwan map (200) 

All of these problems stem from decades of political hostilities. Taiwan and China split in 1949 when the Nationalist Government fled to Taiwan and left mainland China to the communists. China claims sovereignty over the island, which has a leading opposition party pressing for Taiwan independence.

The opening of air services between China and Taiwan has come since the Kuomintang Partywas elected early last year. But the overarching issue of Taiwanese independence is still there so political problems could arise later.

But Taiwan's carriers are enthusiastic about the new traffic rights. Sun at CAL captures the enthusiasm by saying: "This is what we have been working for so many years." TransAsia Airways chairman Charles Chen adds the very survival of TransAsia depended on getting traffic rights to China. "We lost money the last two years," he says, but adds the openingof the Chinesemarket helped it make a profit in the first four months of this year.

TransAsia's biggest local competitors have also suffered financially. While CAL returned to an operating profit in the first quarter, fuel hedging losses dragged it to a net loss of NT$2.96 billion ($90 million). EVA Air made a NT$200 million net profit in the first quarter, in part due to tax credits which it received after posting earlier losses.

Enthusiasm for the new rights is capped in much the same way as the number of Chinese tourists to Taiwan is restricted. China is permitting 3,000 tourist arrivals a day on an annualised average basis. This began with around fewerthan 1,000 daily arrivals Sun says, but by May it reached nearly 7,000. As tourist numbers depend on China granting visas, the Taiwanese know China controls the lever. This has prompted some concerns in Taiwan of possible echoes of Macau's traffic boom, which was abruptly hit last year when the China stopped ­issuing as many tourist visas.

These concerns may explain why none of the Taiwanese carriers are rushing to order aircraft. EVA's sister carrier Uni Air continues to operate 11-13 year-old Boeing MD-90s. Jeng says: "We are thinking about some suitable aircraftbut we are still in the study and evaluation stage." Sun at CAL says: "We have a need for additional capacity but not in the immediate future." TransAsia has no immediate plans to increase its fleet, though may look to replace its older A320s, says Chen. He says the new rights to China offer only enough flightsto keep a small number of aircraft busy.

But there is an expectation China and Taiwan in future will further increase the number of scheduled flights. Liberalisation of air services across the Taiwan Straits "is being done phase-by-phase so we are expecting that maybe by early next year" there will be even more flights, says Sun at CAL.



Jan First passenger flight between Taiwan and China since 1949. It had a brief stopover in Hong Kong. A few other charter flights to Shanghai were permitted during the Chinese New Year holiday period but also with stopovers in Hong Kong or Macau.


Jan-Feb Small number of passenger charter flights permitted between China and Taiwan for the Chinese New Year holidays.


Jan-Feb Passenger charter flights are again allowed for the Chinese New Year holidays.

Jul The first chartered cargo flight takes place between China and Taiwan.

Sep Temporary charter flights commence for the mid-Autumn festival. The two sides agree to allow passenger charters each year for the four major holiday periods, including the Chinese New Year.


Jul First passenger charter flights on a regular basis. Six Chinese and five Taiwanese carriers permitted to operate from Fridays through to Mondays. Each side allowed 18 flights per week.

Nov Agreement to increase the total number of chartered passenger flights each week to 108 and to have 60 cargo flights per month. Also extends the charters to every day of the week and agrees to allow more direct routings. Prior to this, aircraft went through Hong Kong or Macau airspace to reach China.


Apr The two sides increase the number of passenger flights permitted to 270 per week and the number of cargo flights per month to 112 from 60. This agreement also allows for flights to be scheduled.

Click here to read about recent developments in the Chinese market

Related Content