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China Airlines is the flag carrier of the Republic of China (commonly known as Taiwan). The airline is based at its main hub in Taiwan Taoyuan International Airport, the major international gateway to the island. China Airlines’ main competitor is the privately owned EVA Airways. Both carriers focus on international routes rather than the domestic market, which has been impacted by the introduction of a high-speed rail service connecting the north and south of the island. Despite extensive land based transport infrastructure and the small size of the island there are five carriers serving the Taiwanese domestic market, two of which (Mandarin Airlines and Uni Air) are subsidiaries of the international airlines.
Airports in Taiwan
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Chennai customs association reports labour issues at Chennai International Airport air cargo complex
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Virgin Australia and Air New Zealand have applied to the ACCC for a five year renewal of their trans-Tasman alliance which expires on 31-Dec-2013. The renewal would replace the current arrangement that was approved for three years in Dec-2010.
This time around, however, the world has changed. Virgin Australia and Air NZ have requested that the carriers' need to maintain a base level of capacity on the trans-Tasman as a whole, and grow seasonal capacity on some routes, should be dropped as conditions from the renewed authorisation. The airlines claim they have demonstrated that their alliance is not harmful to consumers and has resulted in competitive responses from other airlines.
Furthermore, Virgin Australia and Air NZ say the capacity conditions may in fact be harmful to consumers by preventing the carriers from efficiently reacting to changes in market conditions.
The possibility of Qantas and Emirates extending their global alliance to the Tasman emphasises the need to renew the Virgin Australia-Air NZ alliance, according to the carriers.
Singapore Airlines' (SIA) long-haul low-cost subsidiary Scoot is further exploiting the absence of a local LCC in Taiwan by selecting Singapore-Taipei-Seoul Incheon as its seventh route. Scoot is already the largest low-cost carrier serving Taiwan, which has the lowest LCC penetration rate among major Asian markets. Following the mid-2013 launch of Jetstar Hong Kong, Taiwan will also be the last remaining medium or large-size market in Asia without a local LCC.
Scoot launched service in Sep-2012 on the Singapore-Taipei-Tokyo Narita route, which the carrier now serves daily. The carrier has been focusing primarily on stimulating demand in the local Singapore-Taipei and Taipei-Tokyo markets rather than on Singapore-Tokyo through passengers.
Scoot will similarly focus on the under-served Taipei-Seoul market after launching the Singapore-Taipei-Seoul route on 27-May-2013 with an initial three weekly frequencies. The new route will also boost Scoot’s presence in the competitive Singapore-Taipei market as the additional three weekly flights make Scoot the largest carrier on the route, just ahead of SIA.
VietJet Air is planning to add three new domestic and three new international routes in the coming months as Vietnam’s leading low-cost carrier continues to pursue rapid expansion. VietJet has already surpassed rival LCC Jetstar Pacific to become Vietnam’s second largest carrier after Vietnam Airlines with approximately a 15% share of the country’s fast-growing domestic market. The privately-owned carrier will see its share of capacity in Vietnam’s domestic market approach 20% by mid-2013 – an impressive achievement given it only launched services in Dec-2011.
VietJet now operates 10 routes, including one international route, with a fleet of six A320s. It plans to operate by the end of 2013 a fleet of 10 A320s on 16 routes – 12 domestic and four international.
Hawaiian Airlines faces a challenging time during 1H2013 as its efforts to diversify outside of the Hawaii-US west coast market during the last few years need more time to bear fruit. Its ambitious long-haul expansion is accompanied by the introduction of a new inter-island subsidiary and the reworking of other portions of its inter-island network.
All of the changes Hawaiian is undertaking or planning to introduce are intended to bolster efforts to preserve its profitability, which has been fairly consistent during the last few years. But in the near future the carrier is facing pressure as its new long-haul Asian markets spool up and increases in competitive capacity create pressure in its trans-Pacific service to the continental US.
While the strategy Hawaiian is adopting to persevere in the long-term is solid, the airline might be attempting to accomplish too much too fast, which in the shorter-term is creating pressure on yields and unit revenues.
In this third and final part on the growth of Taiwan’s TransAsia, the carrier sees great potential for cross-Strait traffic once restrictions are loosened: governments have opened more cities that can be linked, but these are smaller and difficult to maintain a sustainable service. Even if greater access at primary cities were offered, obtaining slots is a challenge.
Once ETOPS is secured around 2015, this may pave the way for TransAsia’s A330s to launch intercontinental services, but before then the carrier is considering how it can grow outside its Taipei hub by using liberal traffic rights in Macau, Japan or Thailand, possibly in conjunction with its growing branch offices. TransAsia would be open to gaining overseas scale by working with local airlines – but airlines around Asia have not shown themselves to be eager to enter into strategic partnerships.
And meanwhile the invasion of low-cost operators is quietly growing, largely under the noses of the incumbent Taiwanese airlines.
In the second part of this report, TransAsia weighs how it can expand traffic in Northeast and Southeast Asia but also counter growing foreign LCCs as well as the inevitable local Taiwanese LCC that has yet to form. TransAsia has laid out an undisclosed pathway to guide it depending on what outcomes occur in the Taiwanese market with respect to LCC development.
TransAsia believes it can counter LCCs and competitors in general with the carrier's forthcoming cutover to a new reservation system that will offer it greater agility and be the impetus for the carrier to raise online sales from at least 15% to, perhaps optimistically, over 50% within two years.
TransAsia is also watching the developments with alliances and partnerships and it is interested in having more friends, although the carrier thinks it is early days for it to consider joining a global marketing alliance; this could change if it were invited.