David Knibb
Taiwan's skies will be less crowded if recently announced consolidation plans proceed. How far these go, however, will depend on key players which have not yet revealed their intentions.
Three air crashes in February claiming 218 lives prompted Taiwan's premier Vincent Siew to call for a new 'culture of safety'. Siew demands that Taiwan's Civil Aeronautics Administration take immediate, concrete steps to improve flight safety. Siew's demands have prodded the CAA to call for airline consolidation in the hope of bringing stronger, more stable leadership to Taiwan's nine domestic carriers.
EVA Air's parent, the Evergreen shipping group, has taken that message to heart. Evergreen has announced its intention to merge three local airlines in which it holds equity stakes and to divide functions between that merged carrier and EVA Air. 'Within this small island there are so many airlines. If you include helicopter companies there are 17 airlines,' says an official.
Evergreen owns 45 per cent of Taiwan Airlines, 42 per cent of UNI Airlines, and 25 per cent of Great China Airlines. Evergreen bought its initial stakes in these carriers two years ago when EVA's parent and China Airlines were actively seeking interests in Taiwan's smaller airlines. Evergreen says all the airlines involved in its proposed merger have agreed to work on that merger. A major hurdle will be for Evergreen to agree with the other shareholders in these airlines on the buyout or share-exchange price for their interests.
The merged carrier is slated to take on the name of UNI Airlines, which launched overseas regional flights in its own right in April with a flight from Kaohsiung to Kota Kinabalu in Malaysia. If Evergreen can complete the merger, EVA and the merged carriers would transfer all domestic routes to UNI, leaving EVA to operate only international routes.
Even if the merger goes ahead, Taiwan would still be left with five other airlines. The Ministry of Transport and Communications says it would like to see mergers among the other carriers, but it is not indicating which should merge with which.
Because of its size and government ties, China Airlines is under the most pressure to initiate some move towards consolidation. CALowns some 20 per cent of Far Eastern Air Transport (Feat)but any takeover of Feat would face hurdles. Feat's major shareholders are the influential China Development Corporation and Fubon Insurance. A CAL-Feat merger would raise competitive concerns because together they control 45 per cent of the domestic market.
Evergreen's spokesman predicts: 'Eventually there will be four major airlines in Taiwan - two on international and two on domestic routes - but it will take a long time.'
Source: Airline Business
