A Boom with No Local Heroes: Air traffic in Taiwan is booming. So why aren’t Taiwanese airlines prospering?

Amid the darkness, there is light. In Taiwan, last week’s TransAsia crash breached the airline industry’s supreme mandate: safety above all. But away from the fog of disaster is a positive story about aviation’s most important contribution to humanity: economic prosperity.

Taiwan’s airline industry, in case you haven’t noticed, is booming. Taipei’s main airport, which accounts for almost 90% of the island’s departing ASKs, saw passenger volumes spike 13% y/y in the first six months of 2014. This follows 10% traffic growth during 2013 and 12% growth the year before that, in sharp contrast with the tumultuous 2008-to-2011 period, when Taipei’s traffic shrank in three of those four years. Of the thousands of airports worldwide with scheduled commercial air service, only 31 have seen a greater number of additional seats this quarter relative to the same period last year, according to an Airline Weekly analysis using Diio Mi (and close to a third of these are located elsewhere in greater China).

Taiwan’s double-digit growth in air traffic is not surprising considering how popular the market is among LCCs. When ANA-backed Vanilla Air launched late last year, one of its inaugural routes was Tokyo NRT to Taipei, taking advantage of a new open skies agreement between Japan and Taiwan. Its cousin airline Peach, also backed by ANA, flies to Taipei from Osaka and Okinawa, and from Osaka to Taiwan’s second busiest market Kaohsiung too.

Hong Kong Express, for its part, began serving Taiwan’s third busiest market Taichung last year, complementing Taipei service offered by its sister carrier Hong Kong Airlines. Tigerair flies to Taiwan. So do three Korean LCCs: Asiana-backed Air Busan, Eastar and T’way Air. Cebu Pacific plies the market. And so too, naturally, does AirAsia, the region’s largest LCC, not to mention its co-conspirator AirAsia X.

Taiwan also happens to be a convenient stopover point for ASEAN airlines wishing to serve Japan with narrowbodies that can’t quite make it nonstop. Jetstar Asia, for example, backed by Qantas, flies to Osaka from Singapore via Taipei with A320s, enjoying full rights to sell tickets on all flight legs. Even Singapore Airlines-backed Scoot, armed with long-distance B777s, plays a similar game. The longhaul LCC flies from Singapore to Tokyo via Taipei, also with full fifth-freedom rights.

All the while…

Click Here or the button below to sign up for a Free Trial.

This issue is not currently online. To inquire about purchasing a copy, please email subscription@skift.com.