x Abu Dhabi, UAEFriday 28 July 2017

Chocks away for Taiwan aviation

Building Brics: As tensions with China have eased over the past few years, so Taiwanese air travel in the region has grown. Today, the skies over the Strait of Taiwan are increasingly crowded as tourism booms in the mainland and beyond.

Spring Airlines is set to become the first budget operator to fly between China and Taiwan. AP
Spring Airlines is set to become the first budget operator to fly between China and Taiwan. AP

After decades as one of the world's potential conflict flashpoints, the Strait of Taiwan is now a busy and highly lucrative air route, as easing tensions unleash a tourist boom from the mainland to the self-ruled island.

Now China's biggest low-cost carrier, Spring Airlines is set to become the first budget operator to fly between China and Taiwan.

Spring Air has a fleet of 37 Airbus A320s, with four more on order, and flies to more than 50 cities in China and Asia and the move to fly to Taiwan marks a major expansion for the LCC (low-cost carrier).

It will fly between Shanghai and the southern Taiwanese port of Kaohsiung, followed by a route between China's biggest city and Taipei before the end of the year.

As the world's fastest-growing aviation market, it was only a matter of time before the rising army of aviation-hungry consumers started demanding no-frills options, especially on the big tourist routes.

China considers Taiwan, where the Nationalist KMT fled after losing the civil war in 1949, part of its territory but tensions have eased in recent years since the election of the Taiwanese president Ma Ying-jeou introduced a policy of forging closer economic ties with the mainland.

In 2008, direct flights were resumed and currently some 10 Chinese and three Taiwanese carriers operate 600 weekly flights across the Strait of Taiwan.

Last year, about 2.6 million visitors from China went to Taiwan, up from 1.8 million in 2011, after visa rules for individuals were relaxed.

"Taiwan is a key tourist market for Chinese travellers these days, so I believe the new routes will be become profitable for us soon," the company chairman Wang Zhenghua told The Wall Street Journal recently.

The island is currently building the tourist infrastructure needed to cope with the huge influx of Chinese visitors.

China has trailed the region in terms of developing low-cost carriers.

In the past decade in the region the number of LCCs has increased to nearly 50 from a standing start, including AirAsia's regional routes, Singapore Airline's Tiger subsidiary and Scoot, also in Singapore.

The Chinese government keeps a tight rein on the burgeoning business, to ensure the big state-owned carriers - Air China, China Eastern and China Southern, do not lose their dominant position and also to make sure the overall business does not grow too rapidly and threaten safety.

Chinese authorities are being cautious in dealing with traffic control issues and other logistical details on the heavily congested air routes between major Chinese cities including Beijing, Shanghai and Guangzhou.

China's air passenger traffic rose 14.9 per cent year on year in June, where international passenger traffic was up 17 per cent and domestic passenger traffic up 14.4 per cent, according to the civil aviation authority of China.

The number of passengers reached 319 million last year.

Li Jiaxiang, the director of the civil aviation administration, has said the government would work to help boost the LCC market.

He said currently many foreign airlines were operating in the Chinese aviation market, including 13 LCCs in China's second and third-tier cities.

"The administration will limit flight ticket price increases and there will be no set minimum price as I think the lower the better," Mr Li told the Shanghai Daily, adding that the outlook for budget airlines was good because they could better meet market demand.

There are efforts underway to introduce relevant policies to encourage low-cost airlines, such as the introduction of subsidies and also tax preferential policies to help support technological innovation, as well as encourage the faster development of new e-commerce products to help increase revenue streams.

In the meantime, some airline companies have already seen the potential of LCCs and started testing it.

In May, the Hainan Airlines president Wang Yingming said the carrier was transforming its Chongqing-based China West Air subsidiary into an LCC and said part of the process had already been achieved.

Mr Wang, quoted on Yicai, the China Business News website, said sections of China West Air's operations had already been converted into a budget carrier. He said the carrier's aircraft utilisation rate - the average number of hours per day that an airline's aircraft are actually in flight - improved to 12 in the first three months this year.

Mr Wang said China West Air's fleet would be increased to 100 aircraft, adopt an LCC operating strategy, develop its own IT systems and expand its ancillary revenue sources.

In Hong Kong, China Eastern is cooperating with the Australian carrier Qantas' Jetstar LCC unit and applying for a licence to operate a low-cost airline in Hong Kong called Jetstar Hong Kong.

Increasingly, the infrastructure is there to support both ends of the aviation industry.

China is experiencing a boom in airport construction and air travel with 82 new airports currently being built and plans to expand 101 existing ones across the country by 2015.

Last year alone, the national development and reform commission (NDRC) approved 24 projects to build airports and expand existing airports.

Beijing's Capital Airport handled almost 82 million passengers last year, making it the world's second-busiest airport. Passenger numbers have tripled over the past decade. Beijing's new airport is currently under construction and when it opens in 2015, it will be the largest in the world.

However, there is resistance still among the big carriers to get involved in low-cost airlines.

Wang Changshun, the chairman of Air China, has pointed out on several occasions that Air China would not get involved in LCCs because the external factors such as regulatory policies and environment were not mature.

At the same time, foreign low-cost airlines are entering the Chinese market.

As China's vast urbanisation programme continues, the demand from second, third and fourth-tier cities for air travel will inevitably increase, especially for cheap air travel, which is creating the environment for the development of budget airline travel.

However, there may be some strong cultural obstacles.

Even on the shortest of hops within China, the airlines serve some kind of food, generally a hot dish of rice or noodles. One wonders how the Chinese consumer will react to not getting this repast as a matter of course, or worse, being asked to pay for food on-board.

And Chinese travellers tend to maximise their luggage in ways that appear ludicrous to travellers in the West.

Hand luggage is often numerous and bulky, people bring boxes of fruit or noodles with them on board and often bring suitcases on board that would probably not make it into the hold on an Etihad or Emirates flight.

In Shanghai, at certain times of year, the ground staff put up signs depicting a crab with a line drawn through it, to remind passengers that bringing live Hairy Crabs, a big eastern Chinese delicacy, on board is not allowed.

Yet, as Ryanair and EasyJet in Europe have shown in other markets, such obstacles are not insurmountable.