TAIWAN: Taiwan’s carriers eyeing Q4 techs sales closely

With cargo contributing nearly 30 per cent of the Taiwan’s two main carrier’s – China Airlines and EVA Air - total sales, the cargo divisions are heavily dependent on Taiwan’s electronic exports.


China Airlines and EVA Air


TAIWAN: Taiwan’s carriers eyeing Q4 techs sales closely

With cargo contributing nearly 30 per cent of the Taiwan’s two main carrier’s – China Airlines and EVA Air – total sales, the cargo divisions are heavily dependent on Taiwan’s electronic exports. During the first half, airline operators including China Airlines and EVA Air both reported lower than expected results due to natural and man-made disasters, as well as high oil prices. Things improved a little for the two airlines in August, both of which posted historic high sales from passenger services, as a result of the summer peak travel season and the waning effect of Japan’s March 11 earthquake, tsunami and nuclear crisis. To accommodate increasing passengers, airlines have purchased new planes and hired new staff. However, a decline in cargo business has offset an increase in passenger revenue, experts said. The cargo situation does not look bright for both airlines right now as weakened cargo demand continues to put pressure on the carriers as business from electronics manufacturers has fallen on the back of the downturn in Europe and the US. In August, China Airlines reported cargo revenue of NT$30.9 billion (US$1 billion), a decline of 18.9 per cent year-on-year, while EVA Air reported NT$24.892 billion, a drop of 8.1 per cent year-on-year. The airlines are pinning their hopes for an increase in cargo demand on increased business from IT manufacturers, in the lead-up to the Christmas peak season, although EVA Air president Chang Kuo-wei has has expressed less optimism about the fourth quarter, saying the traditional peak season may be muted this year. But the future is looking up for both carriers as Taiwan’s Ministry of Transportation and Communications (MOTC) has confirmed that Taiwan and Japan are preparing a pact aimed at liberalising commercial aviation services. The MOTC said that except for Tokyo, all Taiwanese carriers can apply to operate scheduled services to 10 Japanese destinations, and there will not be any restrictions on the number of flights. According to Hua Nan Securities, Japan and South Korea account for 16 per cent of CAL’s total passenger flight revenue and seven per cent of its cargo flight revenue, while EVA Air generates 10 per cent of its passenger flight revenue and three per cent of its cargo flight revenue from the routes to and from Japan and South Korea.