EVA Air is remaining silent on why it decided to buy 30 per cent of Taiwan Airlines, but its investment in a third domestic carrier in less than a year has raised many eyebrows.
The Taipei-based carrier will only say the purchase is 'positive' for both Taiwan Airlines and domestic aviation, and EVA will offer technical and restructuring help.
Taiwan Airlines alone is no plum, serving only outlying islands with small turboprops. Aviation officials recently rated its management and aircraft security as poor. But, combined with EVA's own domestic routes and those of Makung and Great China Airlines in which EVA now holds stakes, it puts EVA in control of a quarter of Taiwan's domestic capacity.
Little Taiwan Airlines is being seen as a pawn in a bigger rivalry between EVA and China Airlines, which both see domestic feed as a key to their success abroad. China Airlines with Far Eastern Air Transport, in which it holds 19 per cent, controls nearly 40 per cent of domestic capacity. Even with this latest acquisition, EVA is still well behind.
A battle over domestic market share began when EVA took its stakes in the two local airlines last year. In the autumn EVA ordered six MD90s for Makung and disclosed it wanted to boost its stake in Makung from 32 to 51 per cent. Three months later CAL emphasised its lead in the market by ordering six 737-800s for domestic use.
EVA recently announced that it made its first annual net profit, $7.2 million, in 1995.
EVA's interest in Taiwan Airlines may go beyond its minor domestic capacity contribution - broader uses may be found for the name 'Taiwan Airlines.'
David Knibb
Source: Airline Business
