Taiwanese airlines under attack; AirAsia runs the leasing offer by its board

Dino D'Amore
By Dino D'Amore June 13, 2016 20:07

Taiwanese airlines under attack; AirAsia runs the leasing offer by its board

Taiwanese airlines, already experiencing dramatically shrinking passenger traffic on routes to mainland China, are now being forced to turn their attention to South Korea and Japan, where they are being forced to offer lower fares to capture market share. In fact, the Taiwanese Civil Aeronautics Administration figures show that year on year there has been a 40% increase in the number of flights between Taiwan and Japan, while during the same period there has been a 30% fall in average fares.
China Airlines (CAL) has increased its weekly flights between Taipei and Seoul in South Korea from 70 in summer 2015 to 106 this summer. At the same time the big three mainland Chinese state-run carriers are maintaining their frequency to Taiwan but they are cutting their fares aggressively. By this action, they are pushing out the Taiwanese carriers and at the same time attacking international traffic by promoting very low fares from Taiwan through to Australia and New Zealand via Guangzhou. China Eastern Airlines has cut fares on the Taipei/Shanghai route to a clear 10% below CAL prices for this summer. In response, CAL has lowered prices for the rest of this year to match the fares on this key route.
One wonders if this action by the Chinese big three has a co-ordinated, politically motivated aspect to it as the discounts being offered by the Chinese big three state carriers will result in substantial losses.

Meanwhile, AirAsia Bhd is appointing advisers, including two or three banks, to evaluate the US$1 billion (RM4.1 billion) offer it has received for its aircraft leasing company, Asia Aviation Capital (AAC).

“We’re about to appoint advisers to evaluate it and make presentations to the board. Whether we do a full sale or partial sale … that’s up to the board to decide,” AirAsia group CEO Tan Sri Tony Fernandes told reporters after the inauguration of a US$10 million-US$11 million flight simulator at the Asian Aviation Centre of Excellence (AACE) training centre in Glenmarie last Friday. He added: “There has been significant interest in AAC and the main thing is to strengthen its management team. …We’ve found a CEO and a CFO, [and] we will be announcing the news soon”.

Fernandes said AAC “is becoming an independent lessor” and is growing rapidly and competing to get third party airline deals “now”.

Dino D'Amore
By Dino D'Amore June 13, 2016 20:07