EVA Airways Corp (EVA, 長榮航空), the nation’s second-largest air carrier, has high hopes of getting permission this year to fly through China’s airspace to help save fuel costs, although there are still some hurdles to overcome, a company official said yesterday.
The air carrier is also hoping Taiwan will become a major transit center for Chinese tourists, the official said.
“We hope the government will speed up negotiations with China so that we can see some big breakthroughs on these two issues by the end of the year,” EVA president Chang Kuo-wei (張國煒) told a media briefing.
QUOTA INCREASE
Chang said President Ma Ying-jeou’s (馬英九) re-election would help maintain a stable relationship between Taiwan and China, further boosting the possibility of increased cross-strait flights from the current quota of 558 a week.
For long-distance flights, such as routes to Paris and New York from Taiwan, getting permission to fly through China’s airspace could help local carriers save fuel costs, Chang said.
“Taking EVA’s Taipei-Paris route as an example, flying through China’s airspace could take 30 minutes off the flight time and save the company NT$100 million [US$3.39 million] a year,” Chang said, adding that the move would be convenient for tourists, as well as more energy efficient.
In addition, Chang said Taiwan could become a major transit point for Chinese tourists if Beijing eases travel restrictions for those from second and third-tier cities so that they can transfer via Taiwan without having to obtain exit and entry permits.
EVA chairman James Jeng (鄭光遠) shared Chang’s thoughts.
“Currently, many Chinese tourists flying to the US choose to transfer through Seoul’s Incheon International Airport,” Jeng told reporters. “Taiwan Taoyuan International Airport should also play this role to drive up the airport’s passenger flow.”
Chang said he knows difficulties in cross-strait negotiations remain, as the Chinese government also hopes to gain favors from Taiwan in exchange for relaxing these policies.
However, even without these new initiatives, cross-strait routes are still expected to be the main driver for the company’s passenger business, Chang said, adding that revenue from the passenger sector could grow by about 10 percent this year.
SHIPPING INDUSTRY
Separately, Evergreen Group vice chairman Bronson Hsieh (謝志堅) said he expected the container shipping industry to rebound moderately this year amid improving freight rates.
Evergreen Group includes Evergreen Marine Corp (長榮海運), the nation’s largest container shipping firm in terms of fleet scale.
Hsieh said several global container shippers had cut freight rates in recent years to pursue greater market share, but had only eroded the industry’s profitability.
However, that trend began to change this year, Hsieh said, adding that major global container shippers recently reached a consensus to slow the growth in capacity supply and raise freight rates to help drive up profits.
RATE AGREEMENT
Last week, the Transpacific Stabilization Agreement (TSA), an Asia-based transpacific consortium with 15 member shippers, including Evergreen and Yang Ming Marine Transport Corp (陽明海運), announced an industry-wide rate increase for Asia-Europe routes next month.
The group also recommended rate increases next month for routes to the US’ west coast and to other US destinations in yearly contract negotiations in May.
“We see the TSA announcement as confirmation that carriers are determined to push freight rates back to break-even points,” Primasia Securities Co analyst Freddy Yam said in a note yesterday.
“While we view the TSA move as positive, the sustainability of any rate increases will require more aggressive capacity idling by the industry because container capacity is expected to accelerate this year and next, outpacing estimated growth in demand,” Yam said.
Additional reporting by Kevin Chen
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