For Asia Times Online www.atimes.com
TAIPEI – Taiwanese airlines are arguably among the main beneficiaries of closer Beijing-Taipei ties. They were the few bright spots in Taiwan’s economic landscape during 2011 as ever more cities on the mainland were connected to Taiwan, and restrictions on Chinese tourists visiting the island gradually scrapped.
The sector has still two favors to ask: Beijing should finally open its airspace for the Taiwanese to shorten their flights to Europe and ease visa restrictions for mainland citizens so that they can transit on the island.
Chang Kuo-wei, the president of Taiwan’s second-largest air carrier, EVA Airways Corp, recently challenged Beijing with a call for access to mainland airspace by the end of this year for
Taiwanese airplanes heading to Europe; this would save them both fuel and time. Despite the spectacularly warming cross-strait ties of late, Chang’s EVA and Taiwan’s flag carrier, China Airlines (CAL), must go trans-Siberia for their direct flights to Paris, Vienna, Frankfurt or London.
“Taking EVA’s Taipei-Paris route as an example, flying through China’s airspace could take 30 minutes off the flight time and save the company NT$100 million [US$3.39 million] a year,” Chang said.
EVA’s bosses are also pressing Beijing to allow mainland citizens to Taiwan more freely so that the island can become an Asia-Pacific transfer hub.
“At present, many Chinese tourists flying to the United States choose to transfer through Seoul’s Incheon International Airport,” said EVA chairman James Jeng. “Taiwan Taoyuan International Airport should also play this role to drive up the airport’s passenger flow.”
The island’s carriers, such as CAL, EVA, UNI Air, TransAsia Airways, Far Eastern Air Transport and Mandarin Airlines, are already benefiting from improved cross-strait ties. Non-stop cross-strait services began shortly after Ma Ying-jeou of the Beijing-friendly Kuomintang (KMT) became president in 2008. By the end of 2011, 41 mainland cities and nine in Taiwan were connected by 558 passenger and 56 cargo cross-strait direct flights every week.
“The improvement of cross-strait relations reduces uncertainties for Taiwanese companies [engaged in China]. Hsu Yao-Nan, an associate professor and Chair at the same department, said. “This increases commercial exchanges which in turn means more profit [for airlines].”
To meet demand for the extra flights and more to come, CAL and EVA plan to buy more than 50 new aircraft combined in the coming years. Smaller carriers also intend to expand, given the prospect that Taipei is set to raise the daily entry ceiling on independent mainland visitors to 1,000 from the present 500.
“Taiwanese had to go via Hong Kong to reach the mainland before agreements on direct cross-strait flights were implemented; but now they can fly directly from Songshan [Taipei’s international downtown airport] and Taoyuan,” Chen Jenq-Lian, instructor at Ming Chuan University’s Department of Economics, said in an interview. “As this, plus the opening to mainland tourists, increases the passenger flows greatly, of course Taiwanese and mainland airlines are beneficiaries.”
Taiwan can meanwhile do more to benefit from its improved cross-strait links, according to Lan Ching-Yu, an associate professor also at Ming Chuan. “If Taiwanese airports’ facilities underwent improvement simultaneously with an opening of China’s airspace, Taiwan can certainly make good use of its geographic advantage to become a transfer center,” she said.
Still, granting airspace involves political and military issues much more than economic ones. Until 2008, the outbreak of violent cross-strait hostilities could have occurred on any given day, and how such tensions can affect passenger flights was grimly demonstrated by the Soviet Union in 1983, when Korean Air Flight 007 strayed into Soviet air space and was shot down over the Sea of Japan.
So far, even the most basic mutual military confidence-building measures between China and Taiwan, such as a military hotline, early warning measures, pre-notification of military exercises or the signing of a code of conduct for fighter jets, remain conspicuous by their absence, and while Beijing hasn’t yet responded to Chang’s suggestions, the Taiwanese air force has. It insisted that the median line – an imaginary line separating the airspace of Taiwan and that of the mainland – is “of paramount importance to the defense of the country”, and that it has no orders to ignore it.
Nor is Taiwan likely to become a transit hub in the near future. The facilities of Taiwan Taoyuan International Airport are light years away from being as good as those at Seoul’s Incheon airport, and even if all of Taiwanese international airports were taken together, their combined capacity reportedly couldn’t take even 10% of the mainland passenger volume now handled at the Koreans’ main international hub.
Furthermore, anecdotally illustrating how poor an airport Taoyuan is, late last year two Taiwanese ministers heading to an Asia-Pacific Economic Cooperation meeting in Honolulu, Hawaii, became stuck after a luggage truck went astray and hit the belly of their plane, while another plane carrying former vice president Lien Chan to the same meeting was delayed because of large potholes in the runway.
Visa regulations may be more difficult to fix than runway potholes. For the time being, mainlanders are not allowed to board their connecting flights to the US in Taiwan without having obtained a “Taiwan Travel Permit for Mainland Residents” from a public security bureau back home as well as an “Exit & Entry Permit for the Taiwan Area of the Republic of China” from the Taiwanese authorities. The former comes along with political screening in the mainland and, of course, visa fees are to be paid to both sides.
“A lot of these issues will be the topics on future cross-strait talks, if not currently under negotiation. This is going to be a game of give and take, so it’s quite sensitive,” Joel Shon, a senior researcher on the cross-strait aviation market, told Asia Times Online.
“We don’t see any chance for cross-continent traffic growth in the near future. That’s why the PRC [People’s Republic of China] government needs to balance the interests among all players. So it’s not surprising if it takes time for the PRC to calculate the wins and losses.”
Shon said that at one stage, Taiwanese airlines had in fact been allowed to fly via mainland China to Europe.
“Flights from Taiwan to Europe were mostly by way of Southeast Asia before the Gulf War in 2003. During the war, China granted ‘First freedom’ rights to Taiwanese aircraft passing by or flying over China, but not a direct cut across China’s territory.”
According to the Convention on International Civil Aviation, “first freedom” rights mean aircraft may fly across the territory of either state without landing.
Rules covering flights across the heavily militarized Taiwan Strait have also evolved since Ma Ying-jeou took office in Taipei.
“Flights across the Taiwan Strait have been allowed on a special designed route starting from 2009. It is not a direct cut through either, but [it is] already good enough. However, cross-strait traffic is growing too fast, and the sky in China is too congested. That’s why some carriers suggest a new route be opened to accommodate more flights to let them do more business.”
As to whether Beijing and Taipei will eventually grant that wish, Shon was more optimistic.
“Since the route will eventually touch the very sensitive physical central line between China and Taiwan, politics will be involved. But you can expect that EVA will promote the new route to make more money. EVA will use its influence on both sides to make its wish come true.”
Hu Sheng-Cheng, an economist at Academia Sinica, Taiwan’s most renowned research institution, however doubts that it will all work out well for the Taiwanese at the end of the day.
He pointed out that there are not too many passengers for direct flights from Taiwan to Europe, and that an opening of the Chinese airspace involves negotiations not only on the “first freedom” but also on the “fifth freedom” – the right for an airline to fly between two foreign countries while the flight originates or ends in one’s own country.
If China and Taiwan mutually granted this right, airlines from both would be allowed to pick up passengers in each other’s airports on the way to an aircraft’s final destination.
That would then raise the question of whether “the mainland’s airlines will get more passengers bound for the US from us, or us getting more mainland passengers heading to Europe,” Hu said. “That will depend on our government’s negotiation skills.”