TransAsia Airways, growing at 20%+, now needs to ensure sustainability among strong competition

Taiwan's TransAsia Airways increased its RPKs by 35% in the first 11 months of 2013, demonstrating an ability to attract mainly North Asian passengers while growing. But this was from a small base; TransAsia starts 2014 with only 11 jet aircraft. Its challenge now is to maintain momentum while becoming sustainable. The airline's expected profit for 2013 is due to a strong second half; the first half of the year was unprofitable.

International load factors - around 70% - have room for improvement and can drive revenue growth in absence of lower capacity growth. Peak 3Q2013 (Jul-2013 to Sep-2013) international passengers grew 29.4% to 494,692 but at the expense of 1.7ppt loss on the load factor to 68.7% - and this at peak season.

Some forays, including to Busan and Singapore, have proven not just unwise but that the carrier is not ready for strong LCC competition, which is becoming typical around Taiwan. TransAsia's planned LCC could help the short-haul network but raises the question how to gain scale on both operations. Expanding is easy. Smart and profitable growth is more challenging.