Issue No. 904

Three's A Crowd in Taiwan

Newcomer Starlux Gives China Airlines and EVA Air a Run for Their Money

Pushing Back: Inside the Issue

The first quarter of 2023 will end in just a few days, making way for what’s typically a busier and more financially rewarding period of the year for most airlines. Looking back at the fourth quarter, it was undeniably a good one. Based on a sample of 50 airlines that reported their Q4 results, the industry earned a collective operating margin of 8 percent. That’s $9.4 billion in operating profits off a base of $120.2 billion in revenues.

Caution: Mainland Chinese carriers haven’t reported yet, and they’re likely to drag the numbers down. Ex-China though, the industry entered 2023 with strong profit momentum, with all signs having pointed to ongoing momentum throughout Q1. China’s airline market, furthermore, is now coming alive. And oil prices are at their lowest levels since 2021. Not even a U.S. banking panic is diluting the industry’s bullishness as the second quarter approaches.  

This week in Airline Weekly, we take a close look at Taiwan’s airline market, largely a duopolistic affair until recently. Starlux is now competing with China Airlines and EVA Airways, not content with attacks on just shorthaul markets. It’s in fact jumping on Taiwan’s busiest longhaul route: Taipei-Los Angeles. To the north in South Korea, meanwhile, Air Premia is playing its own version of daring challenger, having entered L.A. before turning its sights on New York.  

 In Portugal, TAP was among those carriers that had a strong fourth quarter, infused with demand from booming tourism. Japan Airlines ordered some MAXs (finally!). Frontier Airlines is living dangerously, expanding in Delta’s Kingdom of Atlanta. Speaking of Kingdoms, Saudi Arabia is planning yet another airline, this one called NEOM Airlines. Expects lots of new capacity. Will there be lots of new demand?

Airline Weekly Lounge Podcast

Saudia Arabia and India are two countries with grandly ambitous airline sectors. Jay Shabat speaks with Skift's Asia editor Peden Doma Bhutia about what exactly these countries have in mind, and whether or not their goals are achievable. A full archive of the Lounge is here.

Weekly Skies

Of all European countries west of Turkey, none have added more airline seats since 2019 than Portugal (see “By the Numbers”). That reflects a boom in tourism, which propelled state-owned TAP Air Portugal to a brawny 9 percent operating margin during the final quarter of 2022, and a 7 percent operating margin for the full year. In the final quarter of 2019, TAP’s operating profit barely came in above zero. And it earned just a 2 percent operating margin percent for all of 2019. As TAP rebuilt its schedules faster than most other European airlines, its Q4 revenues were the most in company history. The fourth quarter, however, was not without its headaches, many of them in fact. TAP endured labor shortages, labor unrest, episodes of social strife, air traffic control bottlenecks, aircraft delivery delays, a shortage of aircraft parts, and even one of its new A320 Neos grounded in Guinea for four months after it hit and killed two airport workers upon landing. Lisbon airport, meanwhile, has for years grappled with severe capacity shortcomings, stifling TAP’s growth ambitions. Another lingering issue is financial leverage, even after collecting about $2.6 billion in state aid since the start of the pandemic—its most recent taxpayer gift came for Christmas, in the form of roughly $1 billion. For TAP, the true Santa Claus might be an acquiring rival, with Air France/KLM making no secret of its desire. TAP was privatized and sold to a group that included JetBlue and Azul founder David Neeleman last decade but was rep-nationalized since. Now Lisbon wants to try again. According to a Reuters report in February, Lisbon “wants to start TAP’s privatization process soon.” One can see why Air France/KLM would be interested, and not only because of TAP’s impressive operating profits last year (which incidentally were way above even the company’s own expectations). TAP’s Brazilian network is second to none among European carriers, and Lisbon one of Europe’s best European gateways to all of South America. TAP has a formidable western and southern African network too, buttressed by traffic tied to linguistic commonality and old colonial ties. It’s been amplifying its North American network too. And Portugal’s fast-growing tourism sector carries extra appeal amid uncertainties about the future of business traffic. New network opportunities beckon as longer-range A321s arrive. But management stresses the need to control costs as inflation bites. This includes labor costs, with new contracts subject to negotiations. The overriding goal: To transform TAP into “a sustainably profitable airline.”

-Jay Shabat

Korean Air-Asiana Merger Faces Further Delays From European Regulators

The Korean Air and Asiana Airlines merger is facing further delays for international approval. The European Union announced that it would be extending its decision date on the proposed acquisition from July 5 to August 3.

The combination of Korea’s two largest airlines was originally announced in November 2020 by the Korean government and Korea Development Bank. The deal would be worth more than $600 million. Korean Air will take an approximately 65 percent stake in Asiana and consolidate the airline.

The European Commission opened an in-depth investigation in February to assess whether the transaction could hurt competition. Preliminary concerns from the first phase of its review addressed the potential antitrust issues for passenger transport and cargo transport services between South Korea and the European Economic Area. Specifically, authorities EC mentioned reduced competition for four direct routes from Incheon to Paris, Frankfurt, Rome, and Barcelona.

Korean Air is a member of the SkyTeam alliance. Following the successful completion of the merger, Asiana will become part of SkyTeam and be integrated into Korean Air, making it the world’s seventh-largest airline according to The Korea Times. Asiana is currently a member of the Star Alliance.

The transaction sought approval from fourteen regulatory bodies. Korean Air submitted required business combination reports to nine countries in January 2021. Since then, it has received approval from mandatory bodies like Australia, Korea, Malaysia, Singapore, Turkey, Taiwan, and Vietnam. 

China approved the merger in December 2022, and the U.K. recently gave its approval in March 2023. Thailand and the Philippines concluded that the submission of a business combination report was not necessary.

The EU, Japan, and the U.S. have yet to give the green light. The transaction is in a preliminary consultation phase in Japan, while the U.S. deemed it necessary to take more time for review.

-Sherry Sun

How India Is Preparing for Its Goal of 1 Billion Airline Passengers

The Indian ministry of civil aviation has set a long-term goal of reaching one billion air passengers by 2040, as stated in their 2019 “Vision 2040 for the Civil Aviation Industry in India” document. 

The country recognizes the need to focus on growing infrastructure and hiring manpower to accommodate the growing number of passengers, which is expected to grow six-fold to around 1.1 billion by 2040.

The government also has plans to construct an additional 26 airports under its regional connectivity scheme and invest $11.9 billion to modernize and construct new airports by 2025.

Additionally, India is also increasing the number of flying training organizations and facilities for aircraft maintenance, repair, and overhaul, said Indian civil aviation minister Jyotiraditya Scindia.

As economic growth, rapid urbanization, rising disposable income and a young population push the aviation sector from 14 million domestic passengers in 2013 to 144 million, India would need a civil aviation infrastructure and capability that would be able to support a $20 trillion economy by 2047, Scindia said.

India’s air passenger traffic increased 47 percent year-on-year to 123.2 million passengers in 2022, almost 15 percent lower to 2019. 

Speaking at an aviation event in New Delhi this week, Scindia said the civil aviation infrastructure in India has grown from 74 airports in 2013 to 148 airports, waterdomes, and heliports today.

India’s six metro cities – Delhi, Mumbai, Chennai, Bengaluru, Kolkata, and Hyderabad – today have a capacity of close to 192 million passengers. “In the next four years these cities will have a capacity of 420 million passengers per year,” Scindia said.

He further said that by the end of this year, Delhi Airport will grow from the current 70 million to 100 million passengers.

Talking about increasing fleet size to accommodate a growing number of air passengers, Scindia also he expects India’s fleet to grow from the present 700 to over 2,000 planes in the next five to seven years.

The minister also cited Air India’s record order of 470 aircraft touted as the largest order in international civil aviation history.

However, this record order of Air India has also brought to the fore a debate on market access as foreign carriers, mostly Middle Eastern ones, have been seeking additional capacity to serve more routes in India.

Many carriers fear that Air India’s 470 jets may capture most of the market.

Dubai’s Emirates, Turkish Airlines and Kuwaiti carrier Jazeera Airways have all called for sharp increases in air traffic rights to and from India to meet demand.

While Dubai has requested an extra 50,000 seats a week from about 65,000 a week on India routes, Kuwait’s Jazeera Airways has called for the current weekly allowance to be taken up from the present 12,000 seats to 28,000 seats.

However, speaking to Reuters, India’s civil aviation minister Jyotiraditya Scindia has said that the country has no plans to increase air traffic rights for the United Arab Emirates. 

Scindia instead urged domestic carriers to fly long haul and help establish new hubs.

Here it’s worth noting that following the merger of Air India and Vistara, India would be left with only one full-service carrier. 

In his interview to Reuters, Scindia said Air India’s widebody plane order and IndiGo’s twin-aisles to some destinations were signs that “transition” had begun.

“The minute you give direct connectivity to international locations directly from Delhi, any passenger is going to prefer a direct connect, rather than going through another country’s hub,” he said.

-Peden Doma Bhatia

Delta Says It’s No. 1 in South America. American Says No Way

Delta Air Lines dominates many aspects of the U.S. airline industry. It makes the most money; it has set pilot wages; it has declared that Wi-Fi will be free. But does it dominate travel between the U.S. and South America?

Delta President Glen Hauenstein last week declared that Delta’s partnership with LATAM has made it the region’s leading carrier. Needless to say, his view is not shared by American Airlines, the leader in South America and Latin America since it bought Eastern Airlines’ Miami hub in 1989.

Hauenstein, speaking March 14 at a J.P. Morgan investor conference, declared, “In South America, when you put LATAM and Delta together, we go from a number three position as Delta to a number one position from U.S. to South America, and we’re gaining share, as we speak.“ In September, the Transportation Department granted anti-trust immunity to the joint venture between Delta and Santiago-based LATAM.

Dennis Tajer, spokesman for Allied Pilots Association, which represents American pilots, attended the conference with several other APA officials. They were perplexed. “It was like ‘really?’,” Tajer said.  “The pilots I was with were saying, ‘You expect them to brag on New York and Atlanta and maybe the transatlantic, but you do not expect them to say that they’re number one in South America.

“Delta is not number one in Latin America or South America,” Tajer said. “But the fact that they’re talking about it means they are coming after us.”  South America refers to the continent, while the term Latin America generally includes South America, Central America, Mexico and most islands of the Caribbean. 

On Tuesday, Jose Freig, American’s vice president of operations and commercial for Mexico, the Caribbean and Latin America, said, “American Airlines has connected travelers with South America for more than 30 years, and, today, we are proud to serve as the leading U.S. airline in the region, with more flights and seats to more destinations than any other single carrier or partnership. 

“Our current network includes service to 16 destinations in South America, including the only nonstop service from the U.S. to Montevideo, Uruguay and Pereira, Colombia,” Freig said in a prepared statement. “Together with our partner GOL, we are able to offer our customers an unparalleled network in the region, and we look forward to continued growth through our partnership with JetSMART.” American and Rio de Jainero-based GOL are codeshare partners: American is an investor in Santiago-based JetSMART.

What do the statistics say?

Mike Arnot, spokesman for Cirium, an aviation analytics company, said Hauenstein is correct when it comes to present and future available seat miles (ASM), which measure capacity, between the U.S. and South America.

“The combined schedules for Q1 and prospective for Q2 2023 put Delta and LATAM about 14% ahead of American on capacity,” Arnot said in an e-mail. “Those schedules could still change for Q2.” 

However, “looking at actual passenger revenue share for the full year ended 2022, American took around 27 percent of the market, whereas Delta and LATAM combined for 18 percent.”  Arnot said. “LATAM had 12.4% of the revenue while Delta had 5.8 percent”, he said.

In terms of ASMs for the 12-month-period ending in March 2023, American and GOL had 32 percent, while Delta and LATAM had 28 percent.  Another measure, counting seats instead of ASMs, benefits American, because Atlanta is farther from South American markets than Miami is, and thus accumulates more ASMs flying to the same destination. In terms of seats, for the year ending March 2023, American and GOL had 32% of seats, while Delta and LATAM had 22 percent.

American’s Miami hub has long been the focal point for service to South American and Latin America, although American serves Latin America from all of its hubs including Charlotte, a major hub for the Caribbean. Meanwhile, Delta is growing rapidly throughout the region, focusing on its Atlanta and New York hubs, and relying largely on LATAM for Miami service.

American said that from Miami, it offers up to 27 peak daily flights to 16 destinations in South America. Additionally, American offers up to 20 daily flights to 10 destinations in Central America, up to 12 daily flights to five destinations in Mexico and up to 84 flights to 40 destinations in the Caribbean.

Systemwide, American said, it offers up to 34 daily flights to 16 destinations in South America. It also offers up to 35 daily flights to 10 destinations in Central America, up to 117 daily flight daily flights to 25 destinations in Mexico and up to 171 flights to 40 Caribbean destinations including the British Virgin Islands starting in June.

As for Delta and LATAM, during March they offer 169,038 seats between the U.S. and South American joint venture countries (Brazil, Colombia, Chile, Peru, Paraguay, Uruguay). “That represents a 30 percent share of seats, and is larger than any other competitor,” said Delta spokesman Morgan Durrant. “Our network is built around where customers want to fly most, and demand to Latin America (including Caribbean) has been strong,” Durrant said. 

Last month, Delta said it will operate seasonal winter service between New York and Rio de Janeiro starting Dec. 16, the third new route announced with LATAM Group. The route “adds to Delta and LATAM’s position as the No. 1 joint venture partnership for service between NYC and South America,” Delta said.

Last week, Delta said it will operate its largest-ever winter holiday schedule to Latin America, with frequency increases on 16 routes from New York, Atlanta, Detroit and Minneapolis. The carrier will offer more than 25,000 daily outbound seats, a 20 percent increase compared to 2022, to 44 destinations.  The flights will operate seasonally from Dec. 16 through Jan. 7.

-Ted Reed

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Japan Airlines, one of the last holdouts in ordering the latest generation of narrowbody planes, finally pulled the trigger on an order, opting for Boeing’s Max. But it’s a modest order. The Tokyo-based carrier will take just 21 737-Max 8s. They’ll start arriving in 2026, replacing B787-800s. Rival All Nippon, for the record, went with Airbus for its new narrowbody needs, acquiring A320-family Neos.

An Update from Boeing and Honeywell:

  • If all you looked at was its order book, you’d probably feel rather optimistic about Boeing. A new Japan Airlines order last week. Giant orders from Saudia Arabia, Air India, and United before that. Defense departments want its planes too. But as CFO Brian West made clear at a Bank of America investor event last week, not all is well at the big planemaker. Getting new aircraft orders is one thing. Building them is another, and Boeing is not yet “out of the woods” with respect to supply chain bottlenecks and labor shortages. Customers are once again taking B787 Dreamliners after a brief pause, which followed a much longer stoppage earlier. But the company is not ready to boost production rates yet, despite a large backlog of demand. West says he hopes to see a build rate of about five B787s a month “as we exit the year.” Boeing’s other fast-selling product is its B737 MAX, whose -7 and -10 versions remain uncertified (Southwest is by far the largest customer for the -7). As for its new B777, sales for the passenger version haven’t been great, and not only because it’s running years behind schedule (it might just be too big for what many airlines need). In addition, Boeing still has a China problem, which in this case is more about demand. Chinese carriers are flying MAXs again after a lengthy grounding but haven’t ordered any new planes from Boeing in several years, deterred by U.S.-China tensions. West doesn’t seem terribly concerned about China’s Comac, however. He said China will need more than 8,000 planes in the next 20 years, “so we think there’s a role in there for the competitors to play.” He adds: “And by the way, the C919, it’s not a new competitive entry. We’ve known about that. We are comfortable with that. Market’s big. Let’s go compete and win.” Is Boeing ready to build a new narrowbody family to eventually supersede the MAX? Not until next decade at the earliest, West said.
  • At that same Bank of America conference, Honeywell said point blank that “it’s a great time to be an aerospace supplier.” That reflects today’s strong demand for aircraft manufacturing and servicing. Demand from China is now returning as well, including for widebodies. Asked about a future generation of Boeing and Airbus planes, CEO Mike Madsen said, “I think about that quite a bit.” He notes that on the widebody side, B787s and A350s are still rather new aircraft. With respect to narrowbodies, Airbus is doing a lot to update its A321s, i.e., offering longer-range versions like the LR and soon XLR. “I think that barring a big shift in fuel prices or something that drives a change in the demand for sort of that intermediate-length segment, I don’t know that we’re going to see another big investment in aircraft for a while. We’re sort of planning around that 2028-2030 time frame.” Separately, Madsen mentioned “an enormous increase” in non-corporate flight activity on business aircraft post-Covid, suggesting a migration from commercial to private flying. “You see that in the fractional products, the card products from companies like NetJets and Flexjet, big increase in demand there… I think that’s there to stay.” This might help explain why airlines haven’t seen corporate bookings return to pre-crisis levels—maybe many of their former customers are now flying private. What else did Madsen have to say? For one, Honeywell is busy getting its products compatible with use of sustainable aviation fuel, which will lead to more efficient engines, auxiliary power units (APUs), flight routing systems, fuel management systems, and so on. In another decade and a half or so, the company expects hydrogen to play a greater role in powering aircraft. It’s watching hybrid power systems too: “think batteries, combined with turbo machines, fuel cells combined with turbo machines, that allow you to optimize your power levels, your emissions, your fuel consumption on the ground versus in the air.”
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Landing Strip

Throughout a troubled 2022, the pandemic exposed many fragilities in a troubled U.S. airline industry, but it also enabled a widely recognized miracle in the $8 billion resurrection of New York LaGuardia Airport. Once widely viewed as a hellhole, LaGuardia was transformed.

Transformation involved rebuilding two terminals, each costing about $4 billion, as well as about five miles of roadway. Terminal B has 35 gates, occupied by American and four other airlines. Work began in 2016 and was completed on July 8, 2022, the exact day specified in a bond offering six years earlier. Terminal C, occupied and financed by Delta Air Lines, will have 37 gates. Work began in 2017 and is largely finished, with completion by the end of the year.

Corridor at renvoated LaGuardia lined with translucent photographs of New York. Source: Port Authority of NY & NJ.

“You’ve had two miracles in Queens,” said Rick Cotton, executive director of the Port Authority of New York and New Jersey. “One was the Mets World Series win (in 1969) and the other was the rebuilding of LaGuardia in record time and while the airport was operating throughout the construction. LaGuardia was the first totally new major airport in the United States since Denver, and Denver was a greenfield.” The 1969 New York Mets are widely referred to as “the Miracle Mets’ for winning the Series after never playing a winning season. Denver International Airport opened in 1995. 

Last week, Terminal B was recognized by Skytrax, a London-based transport rating firm, which ranked it as the world’s best new airport terminal. Terminal B is the first terminal in North America to receive a five-star airport terminal rating. Primary occupant American Airlines and Northeast Alliance partner JetBlue occupy about half of the gates; passengers connect easily between the two carriers. A second concourse is occupied by Southwest, United and Air Canada.

“Everybody hated LaGuardia. People we met in New York used the word ‘hate,’ and we turned that around,” said Stewart Steeves, chairman of LaGuardia Gateway Partners, which oversaw construction, as well as chief operating officer of Vancouver, B.C.-based Vantage Airport Group, which operates the terminal for the Port Authority. Steeves noted that in  2014 then Vice President Joe Biden said of LaGuardia that a visitor relieved of a blindfold would say, “I must be in some third world country.”  Seeking change, Steeves said, “We made it a mission statement to make it an experience that everyone would love, and that’s in fact what’s happening. The word ‘love’ is showing up. We see it on social media, on popular talk shows, and in our data. It’s been absolutely transformational.”

The award reflects that Terminal B “is a product of thinking about every aspect of design and service around the customer experience — art, restaurants, (and) entertainment features” Steeves said. “We tried to have a facility where people would want to spend time, that has hospitality and not just transportation, that is somewhere pleasant to be, not feeling stressed or anxious about travel.”  Cotton noted that both Terminals B and C are airy and light, embellished with high grade security and ticketing technology, stocked with local food and beverage purveyors and embellished with public art displayed by the Public Art Fund of New York and the Queens Museum.

Indoor art-filled plaza at LaGuardia Terminal B Source: Port Authority of NY & NJ.

While Terminal B was financed by LaGuardia Gateway Partners, Terminal C was financed by Delta, which is LaGuardia’s largest carrier. Terminal C will have 38 gates, of which 28 are operating now. “Today marks a new beginning for Delta customers and employees at our LaGuardia hub with the opening of this remarkable new terminal,” Delta CEO Ed Bastian said on June 4, when C was partially opened. This summer, Delta will offer up to 255 daily departures to nearly 70 destinations. 

Building a new airport on top of a busy, operating airport was challenge enough, and that was before the pandemic struck. “The first half was built pre-covid; the second half of each terminal was built during covid or past covid,“ Cotton said. “There was a commitment on the part of the Port Authority that they both needed to finish on time, working with LaGuardia Gateway Partners on B and Delta on C, with the Port Authority responsible for rebuilding the roadways. All three construction projects needed to be coordinated in relation to each other.”

The pandemic’s arrival brought plusses and minuses. On the plus side, “There was an astonishing decline in cars on the roadways, which self-evidently helped the roadway construction,” Cotton said. “But also, for the terminals, we were able to reduce the restrictions in terms of construction vehicles being on the roadway: to some extent we were able to allow lanes to be closed to regular traffic overnight.”

But the pandemic also brought supply chain bottlenecks as well as challenges to maintaining a safe work environment, for instance in terms of providing food and clean washrooms for workers. This was resolved in cooperation with the Building and Construction Trades Council, the workers union. “Typically on a construction site those are port-a-johns, but we broke one of the cardinal rules of construction sites,” Cotton said. ”In this case, we all jointly decided that the new airport bathrooms would be open to the construction workers.”

-Ted Reed

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Routes and Networks

For many years, Korea–like Taiwan–was a two-airline market, at least for longhaul. Now, just like in Taiwan with StarLux, Korea has a new challenger in Air Premia. Launched last year, it’s ambitiously flying Dreamliners to Los Angeles, challenging incumbents Korean Air and Asiana. But wait. Korean Air and Asiana are now merging, pending regulatory review. Which opens a very big door for Air Premia. Another big step through that door will be launching its second new U.S. route in May, this time to Newark. Not without significance, Korean Air and Asiana both focus on New York JFK airport, leaving Newark open for the taking. Much of the Korea-U.S. airline market rests on family-visit and immigration travel. And as it happens, there are large Korean communities on the New Jersey side of the Hudson River, including “Korea Towns” like the one in Palisades Park just 20 minutes north of Newark airport. Air Premia’s new route will operate four times a week with Boeing 787-9s. Keep in mind too that Korea’s government will likely strive to foster more competition against post-merger Korean Air, putting Air Premia in a favorable position policy-wise. To emphasize though, the merger isn’t a done deal yet.

  • Israel’s El Al is laying the groundwork for a new Tel Aviv route to Melbourne, Australia. Globes reports that the carrier struck a deal with local officials to launch operations next June using Boeing 787s. This year, El Al is opening or reopening routes including Tokyo, Dublin, Istanbul, and Porto.
  • How’s this for bold: Frontier is entering the lion’s den, expanding aggressively in Delta‘s Atlanta stronghold. Its latest round of new flights includes service to Guatemala City, Santo Domingo, and San Diego. Frontier will soon connect Atlanta to 10 international destinations and 28 U.S. destinations.

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Feature Story

For China Airlines, two plus one equals negative $53 million. That’s how many U.S. Dollars the Taiwanese carrier lost at the operating level last quarter, as it grappled with the challenge of a two-airline market becoming a three-airline market.  

During the fourth quarter of 2022, most airlines in East Asia finally had something to celebrate. Many managed muscular profits thanks to a sharp revival in passenger demand. Thai Airways, for one, produced an unearthly 21 percent operating margin. Singapore Airlines reached 16 percent and All Nippon Airways 14 percent. Korean Air, lifted by extraordinary cargo profits during the pandemic, this time rode passenger strength to a 14 percent margin. Hong Kong’s Cathay Pacific earned 15 percent for the six months ending in December, implying a much higher figure for just the last three months.

Then why is China Airlines, or CAL, still losing money? Its $53 million Q4 operating loss translated to a negative 4 percent operating margin. Longtime rival EVA Air, almost identical in size measured by revenues, did better but certainly not Singapore Airlines better. Its Q4 operating margin was a modest positive 5 percent. Both CAL and EVA felt the slowing momentum in cargo markets—cargo represents about 40 percent of CAL’s revenues and 26 percent of EVA’s revenues. Both are also still feeling the impact of mainland China’s delayed reopening. In 2019, CAL and its Mandarin Airlines unit—and EVA and its Uni Airways unit—each served more than 30 mainland markets.

One difference between the two is their relative exposures to North America’s passenger market. CAL’s is less, with flights to just New York, Los Angeles, Ontario, San Francisco, and Vancouver. Before the pandemic, it flew to Hawaii and Guam as well. EVA, by contrast, has a larger North American footprint, which is a good thing right now. EVA flies to New York, Los Angeles, San Francisco, Seattle, Chicago, Houston, Toronto, and Vancouver, all boosted by Star Alliance links to United and Air Canada. CAL, for the record, is larger in Europe, Australia, and Japan. CAL also has full control of a low-cost airline called Tiger Taiwan, offering flights to Japan, Korea, and various ASEAN destinations.

Since 2016, CAL and EVA mostly just battled each other, aside from foreign competitors. And foreign competitors, while numerous within Asia, have otherwise shown limited interest in Taiwan. United is the only North American airline currently serving the island (from San Francisco). Turkish Airlines is the only European airline doing so, though Air France and KLM did so before the pandemic. Australia’s airlines don’t serve Taiwan, though Air New Zealand does. Emirates is the only other longhaul carrier in the market, not counting carriers like Cathay Pacific which move Taiwanese longhaul traffic via their hubs (in Cathay’s case Hong Kong).

The point is, Taiwan’s intercontinental markets have largely—for decades—been a one-on-one battle for nonstop traffic: CAL vs. EVA. Well, not anymore.

In 2020, just as Covid began to spread, a new airline emerged on the island of Taiwan. Its name: Starlux. Its founder: A former EVA chairperson. Thus far, Starlux has focused on shorthaul routes within Asia. But next month, it will challenge EVA and CAL on the prized Taipei-Los Angeles route, using its first Airbus A350-900s. Starlux is far more ambitious than earlier Taiwanese “third party” airlines like TransAsia or Far Eastern Air Transport, both long defunct. The L.A. route and the A350s speak to that. Importantly, it’s also targeting premium passengers, a key segment for both CAL and EVA.

Can the Taiwanese market support three premium intercontinental carriers? Based on the lackluster profit margins for both CAL and EVA during the 2010s, the answer is likely no. One possibility is that EVA Air and Starlux eventually become one, though any such outcome could hinge on family politics of all things. Both carriers have ownership links to the same family.

In the meantime, all three carriers must manage challenges ranging from the slowing cargo market to heightened U.S.-China tensions. Both are hoping to generate more business from sixth-freedom connecting traffic linking North America and Europe with the ASEAN region. But that’s a hyper-competitive market with Japan Airlines, All Nippon Airways, Korean Air, Cathay Pacific, and Singapore Airlines all trying to do the same. CAL is adding new A321 Neos and will start flying B787s in 2025. It aims to end the year with 88 planes, 65 of them for passengers (and of those 65, 43 will be widebodies). In July, CAL will expand its European footprint with a new Taipei service to Prague, twice per week with Airbus A350s. It also flies to London, Frankfurt, Amsterdam, Rome, and Vienna.

As for EVA, it’s now sporting B787-10s, with more Dreamliners on the way. It’s one-upping CAL and adding not one new European route but two—Milan and Munich will launch this fall, adding to London, Amsterdam, Paris and Vienna. As long as North American passenger demand stays strong, EVA should continue to outperform CAL. But with Starlux now attacking L.A., a key North American route faces the specter of falling yields. With 16 more A350-900s on order, Starlux is not about to ease up on the pressure. For CAL and EVA—and perhaps Starlux as well—that could add up to some bad math.  

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By the Numbers

*The top countries on this list are big tourist destinations, all of them benefitting from the post-Covid surge in leisure travel

*Note how many more airline seats Germany has lost than even Russia. In western Europe more generally, it’s the markets with a lot of business travel that have lost the most seats. For more on Germany’s situation, see Airline Weekly’s January 9th feature story:

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