China and Taiwan strengthen air ties as Asia's aviation industry soars

Taiwan and China to add direct flights as ties improve, while Beijing unveils an ambitious aviation development plan. Meanwhile, Boeing and Airbus face new challenges.

A Chinese man buys souvenirs at a counter of the National Palace Museum in Taipei. Patrick Lin / AFP

While aircraft makers in the West lick their wounds over a series of potentially damaging incidents and revelations, Asia's aviation sector is soaring.

The number of direct flights between Taiwan and China will rise more than 10 per cent this year to 616 flights per week amid ever-closer ties between the two former rivals.

The countries have agreed to add 58 flights to the present 558 weekly flights, says Lee Wan-li, the deputy director-general of Taiwan's civil aeronautics administration.

"It is fair to expect the new flights no later than April, but in the end it will be up to the carriers from the two sides which provide flight services on the routes," he says.

China will put eight more destinations on the map, including Lijiang, a popular scenic spot in the south-west, while Taiwan will add Chiayi city in the island's south, says Mr Lee.

Direct chartered flights began in 2008 and scheduled flights the following year, amid rapidly improving ties following the election of Taiwan's China-friendly president Ma Ying-jeou five years ago.

He was re-elected last year for a second and final four-year term. A 62-year ban on solo Chinese travelling to Taiwan was lifted in June 2011.

Previously, mainland tourists had been allowed to visit Taiwan only as part of official tour groups because of fears they might overstay their visas to work illegally on the island.

Mainland Chinese made a record 2.2 million visits to Taiwan last year, up nearly 50 per cent from the year before, according to Taiwan's national immigration agency.

China, the world's fastest-growing air-travel market, has just released an aviation and aerospace development plan that includes efforts to bolster the role of local airports and promote domestically-manufactured planes.

Authorities will seek to transform airports in the cities of Beijing, Shanghai and Guangzhou into international hubs, according to a state council plan posted this week to the civil aviation administration of China's website. They will also encourage the development and use of Chinese-made regional jets and general aviation aircraft and accelerate reform of how the country's airspace is managed, the post said.

A more than 90-fold surge in China's economy in the past two decades has fuelled demand for flights. The state council's plan is based on guidelines released in July - the first China had issued for the domestic aviation industry. Chinese carriers will need 5,260 new planes worth US$670 billion (Dh2.46 trillion) through to the end of 2031, according to Boeing forecasts.

"The government is sending a clear message that aviation is very important," says Li Lei, an analyst at China Minzu Securities in Beijing.

"But the current problems such as airspace restrictions or airport slot limits won't change overnight."

China will also promote localisation of the aircraft, engine and equipment industries and encourage the development of a green, low-carbon aviation industry, according to the plan.

Meanwhile, Cathay Pacific Airways and Singapore Airlines are spending $207 million fitting flat-bed seats and larger TV screens in business class. Finding passengers to fill those seats may be a challenge.

Sales at the front of the cabin fell short of expectations last month, Cathay Pacific said last week, as the Hong Kong carrier this month introduced promotional business-class fares. "When financial institutions [in the West] are firing people, traffic and profits at airlines like Cathay and Singapore Airlines are affected because they are known for serving premium passengers like bankers," says Mr Li.

"Their home bases are too reliant on financial services and trade."

In the West, France's Airbus has targeted sales of 700 passenger jets this year, as it attempts to wrestle back its crown from its US archrival Boeing as the world's biggest seller of commercial aircraft.

In a bullish forecast, the French manufacturer also predicted it would sell at least 25 of its flagship A380 superjumbos.

As expected, Airbus fell behind Boeing for the first time in five years in terms of overall passenger jet orders last year, securing 833 net orders against Boeing's 1,203. For the first time in a decade, Airbus delivered fewer commercial aircraft than Boeing: 588 compared with 601.

Speaking to the Financial Times, Fabrice Brégier, the Airbus chief executive, said he was more concerned about increasing deliveries, which have risen for most of the last 11 years, than losing the top spot.

"If Boeing does slightly better one year, then so what?" he said, pointing out the new Airbus A320neo remained a market leader in the important single-aisle jet market.

Boeing is reeling from safety concerns about its 787 widebody jet, which have prompted regulators to ground all 50 that the company has delivered.

Airbus, meanwhile, is targeting a launch of its next-generation A350 in the second half of next year and a maiden test flight in "mid-2013", but has had problems with some suppliers.

"The A350 programme remains very challenging and we can be taken by surprise too," Mr Brégier said.

* with AFP and Bloomberg News