Taiwan looks to foster homegrown low-cost carriers

An unusually public discussion about supporting local low-cost carriers is occurring in Taiwan. Once a sleepy market, like elsewhere in North Asia, Taiwan is seeing growth on the back of regional services and cross-strait flights to mainland China. But a shakeup is needed if Taiwan is to realise its goal of increasing tourists from six million in 2011 to 10 million in 2015. New and high-profile LCCs are entering, including Scoot, a subsidiary from none other than perceived industry-standard Singapore Airlines, as well as Peach Aviation, partially backed by All Nippon Airways in Japan, a market once synonymous with stagnation.

With LCCs from the north and south, as well as Jetstar setting up a subsidiary in Hong Kong, Taiwan is understandably seeing opportunity. But there is also the threat of encirclement, although not all incumbent Taiwanese carriers agree on that. China Airlines and EVA are cautious to unsupportive while the LCC mongering has been pushed by TransAsia Airways, whose lean position could see it capitalise on opportunities. Taiwan's regulator has finally entered the discussion and effectively gave its blessing for local LCCs to be established, although significant reforms are needed. If realised, great benefits await.