China Airlines (CAL) has been through more than most international carriers in recent years, suffering from fatal accidents in the mid-to-late 1990s while surviving the economic downturn. Christine Tsung says she intends to keep the difficult times firmly behind the airline. Accordingly, she will focus on building brand awareness around the world while working to rationalise operations.
"China Airlines is a very sophisticated, well-established airline," says Tsung, adding that she will continue to focus on improving safety and changing the airline's traditionally "autocratic" style of management. "But we have not had the proper exposure to the international media. In a recent survey we were ranked Number 2 for our first class, but people do not know. I want people to know. I want them to give CAL a chance."
Tsung says she aims to use the impending difficult times as an opportunity to pursue investments, and she is looking at acquiring a stake in a cargo services project at China's Xiamen airport. She is also aiming to step up discussions for a minority stake in Shanghai-based China Cargo Airlines, which is 70%-owned by China Eastern Airlines.
CAL intends to dispose of its 9% stake in domestic carrier Far Eastern Air Transport (FAT) and will instead look at building up its 90%-owned domestic and regional subsidiary, Mandarin Airlines. While FAT has performed poorly, Tsung says Mandarin has been a success for CAL, adding that it will be well placed to operate to China should flights between the two territories be allowed. Direct flights have been banned since 1949 when the Communist victory forced opponents to flee to Taiwan.
As part of its rationalisation programme - vital as another downturn looks set to hit the regional industry hard - Tsung is considering orders for Airbus A330s for use on regional routes to replace Airbus A300-600Rs. Amid a slowdown in the cargo market, firm orders for Boeing 747-400 freighters may be converted into Boeing 777-300 passenger aircraft, while CAL's cargo route network will be reworked. Similarly, wet-lease contracts on 747 freighters with Atlas Air will not be renewed, while talks will be held on operational partnerships with other airlines. For example, CAL and Northwest Airlines are studying a wide-ranging cargo alliance that would let both to expand their networks.
Tsung has no immediate plans to join a multilateral passenger airline alliance, however. "When business is not good, alliances are very good to move forward. But when you have over 80% load factors and are in an alliance, you may have to give up some of your yield."
That said, she says there are opportunities to work more closely with Taiwan's second carrier, EVA Airways, which is controlled by the Evergreen Group and which is close to Taiwanese president Chen Shui-bian, who took office last year. The two carriers have been arch rivals since EVA began operating in July 1991, but Tsung says a new relationship is possible. "We are closer than we used to be," she says. "We are happy to co-operate with them. We help each other - if we need an emergency engine, for example, they give to us, and vice versa. I can see two airlines continuing to operate side by side and living happily."
Tsung's focus on investments in China, meanwhile, is a bold move as there are stringent restrictions on cross-strait investments. On-off talks for a stake in China Cargo have been held for some time but Tsung aims to throw herself into the talks in the hope a deal can be sealed this year.
CAL is thought to be seeking a 25% stake for $60 million. Chinese authorities have said they would welcome investment from CAL, although political concerns in Taiwan are said to be holding up progress. President Chen has repeatedly angered Beijing authorities because he advocates independence from China. "Talks are on," Tsung says. "Now I will put this project on my list and personally get my hands into it. As soon as I step into this project it will start to move. As soon as I step into this project it will be successful."
Source: Airline Business
