TAIWAN'S AIR CARRIERS BEGIN FLIGHTS OVER

UNCLAS SECTION 01 OF 02 TAIPEI 003717

SIPDIS

DEPARTMENT FOR EAP/RSP/TC

DEPARTMENT PASS AIT/W AND USTR
USTR FOR TIM WINELAND
USDOC FOR 4430/ITA/MAC/EAP
TREASURY FOR OASIA - WISNER

E.O. 12958: N/A
TAGS: EAIR ECON PREL TW CH
SUBJECT: TAIWAN'S AIR CARRIERS BEGIN FLIGHTS OVER
CHINA

Ref: A)TAIPEI 3292 B)TAIPEI 3661


1. Summary: On September 5, four Taiwan air carriers
have started to fly through China's flight information
region (FIR) to South Asia, the Middle East and Europe.
The PRC granted overflight permission to the four
carriers on September 2 less than one month after
Taiwan Premier Frank Hsieh announced Taiwan would
permit such flights. In a separate cross-Strait
aviation development, Hong Kong Express Airways
launched the first Hong Kong-Taichung charter service
on September 3. End Summary.

PRC Approves Taiwan Overflight Requests
--------------


2. On September 2, 2005, China's General
Administration of Civil Aviation (CAAC) announced that
four Taiwan airlines, CAL, EVA Airways, UNI Airways,
and Mandarin Airlines, would be permitted to begin
regular flights from Taiwan through China's flight
information region (FIR) to international destinations.
The move came less than one month after Taiwan's
Premier Frank Hsieh announced on August 3 that Taiwan
would allow such flights in order to save fuel. China
authorized four Taiwan air carriers a total of 124
passenger and cargo flights per week through China's
FIR to Europe, South Asia and the Middle East. They
will benefit from an annual cost savings of up to NTD
400 million (about USD 12.5 million).

First Flights Take Off, Some Routes Denied
--------------


3. CAL and EVA Airways became the first beneficiaries
of new overflight authorization. On September 5, the
first CAL cargo flight flew over Hong Kong, China,
Burma, Bangladesh, Pakistan, Iran and Oman on its way
to the United Arab Emirates; and the first CAL
passenger flight passed over China on its way from
Taipei to Hanoi, Vietnam. EVA Airways' first cargo
flight through China's FIR flew from Delhi, India over
Yunnan, Guangzhou, and Hong Kong to Taipei; and its
first passenger flight flew from Taipei over Hong Kong
and Guangzhou to Laos. CAL has scheduled 70 passenger
and cargo flights per week through China's FIR, and EVA
Airways has 40 flights per week planned. Both UNI
Airways and Mandarin Airlines started flying over
China's FIR on September 7. UNI Airways has scheduled
eight flights per week from Kaohsiung through China's
airspace to Hanoi; and Mandarin Airlines has scheduled
six flights per week from Taipei to Rangoon, Burma.
However, the PRC's CAAC rejected several routes
requested by CAL and EVA Airways through northern
China's FIR citing heavy air traffic in the region.


HK-Taichung Charter Flights Start by HKEA
--------------


4. Hong Kong-based Hong Kong Express Airways Ltd.
(HKEA),which just started operations on August 8,
2005, has become the first airline to offer Hong
Kong-Taichung charter flight service. Taiwan approved
HKEA to fly five round trips between Hong Kong and
Taichung from September 3 through 7. The first flight
left Hong Kong on September 3 carrying passengers that
included HKEA executives and Hong Kong journalists.
Round trip tickets cost NTD 4,000 plus an additional
airport tax/fuel tax and insurance of NTD 1,700 (about
USD 175 altogether). Taiwan's airlines have not yet
expressed interest in offering similar charter
services. Currently, Taichung's Chingchuankang airport
offers service for Taiwan's domestic routes and various
charter flights to Japan, Bali and Phuket. An
expansion project is underway to improve the airport's
facilities and make it more suitable for international
flights.
Keegan