MAC GIVES POSITIVE INTERIM RESPONSE TO PRC CHARTER

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 004484

SIPDIS

DEPT FOR EAP/TC
DEPT PASS AIT/W

E.O. 12958: DECL: 11/04/2015
TAGS: EAIR ECON PREL CH TW
SUBJECT: MAC GIVES POSITIVE INTERIM RESPONSE TO PRC CHARTER
FLIGHT LETTER

REF: TAIPEI 4210

Classified By: AIT Acting Director David J. Keegan, Reason 1.4 d


1. (C) Summary: Pu Zhao-zhou, Director of the China Civil
Aviation Administration's (CCAA) Taiwan, Hong Kong, and
Macau Affairs Office, sent a letter to Tony C.C. Fan (Zhi-
qiang),Chairman of the Taipei Airlines Association (TAA)
proposing that if Taiwan and PRC cannot reach an agreement
to proceed soon with formal discussions on cargo charters
and weekend passenger charters, then they should begin
separate discussions on passenger charter flights for the
2006 Lunar New Year holiday. The Mainland Affairs Council
(MAC) issued a press statement November 4 indicating that
the Taiwan government was considering the possibility of
proceeding with Lunar New Year charter discussions
separately. MAC officials told AIT/T the statement was
intended to be a positive interim response. Comments by
Minister of Transportation and Communications (MOTC) Lin
Ling-san in the press and National Security Council (NSC)
Senior Advisor Chen Chung-shin suggest that the Chen
Administration may be willing to proceed with separate
Lunar New Year charter discussions soon. This would be a
positive step and reinforce each side's commitment to
progress on charter flights, but it would do little to
resolve issues that still stand in the way of regular cargo
and passenger charters. End summary.


2. (C) Taiwan's media widely reported November 4 that Pu
Zhao-zhou, Director of the CCAA's Taiwan, Hong Kong, and
Macau Affairs Office, sent a letter to Tony C.C. Fan (Zhi-
qiang),Chairman of the TAA and TransAsia Airways,
proposing that CCAA and TAA discuss Lunar New Year
passenger charter flights for 2006, using the same model
for discussion that was used January 15, 2005 in Macau to
agree to the 2005 Lunar New Year charter flights. TAA's
Fan publicly confirmed that he received the letter and
forwarded it to the MAC, but had no other comment for the
press. He told AIT/T that he received the letter by fax
the morning of November 3. He said the letter suggested
separating Lunar New Year charters if the two sides were
unable to reach agreement soon on formal discussions of cargo
charters and weekend passenger charters together. (Note:
This year the Lunar New Year holiday falls on January 29,
charter flights would need to begin up to two weeks in
advance. End note.) Formal discussions are not likely to
take place on any charter flights until the two sides have
already informally agreed to all of the conditions for the
flights. The January 15, 2005, discussions for last year's
Lunar New Year charter flights were concluded in less than
two hours.


3. (C) MAC issued a press release on November 4 with its
initial reaction. In the press release, MAC said that
relevant government agencies were already examining the
issue of whether Lunar New Year passenger charters should
be discussed separately from cargo charters and the regular
weekend passenger charters due to the shortage of time.
MAC Senior Secretary Lee Li-jane indicated to AIT/T that
the MAC press release although inconclusive should be seen
as a positive interim reaction to what MAC views as
expression of goodwill from the PRC. However, she noted
that to proceed with Lunar New Year passenger charter
flights ahead of cargo flights would be a significant
concession to the PRC, which has stronger interest in
passenger charter flights, and Taiwan would have to
consider its next step carefully. (Note: The PRC has
advocated moving immediately to regular weekend charters,
while Taiwan has pushed for gradual implementation of
passenger charters with Lunar New Year flights first,
followed by other major holiday flights, and then weekend
charters. End note.)


4. (C) According to media reports, Taiwan Minister of
Transportation and Communications Lin Lin-san yesterday
said that he expected formal discussions of Lunar New Year
passenger charter flights to take place in November. He
speculated that travelers should be able to make
reservations by early December. National Security Council
Senior Advisor Chen Chung-shin also told AIT/T that the
Chen Administration might be willing to proceed with Lunar
New Year passenger discussions ahead of discussion of cargo
flights. He commented that Taiwan's priority was to link
cargo charter flights to weekend charter flights. He also
pointed out that Lunar New Year passenger charters would be
relatively simple to implement based on the principles the
two sides agreed to last year.


5. (C) TAA's Fan told AIT/T that in his opinion from a
technical perspective it would be best to begin formal
discussions of Lunar New Year flights before the end of
November. He argued that after mid-December it would
probably be too late. This suggests that the Chen
Administration still has the option of waiting until after
the election to discuss Lunar New Year flights separately.
Fan also explained that the only outstanding issues on
Lunar New Year charters are whether Taiwan will open the
flights to others besides Taiwan investors in the PRC and
the possibility of adding additional destinations in the
PRC. (Note: Last year charter flights flew between
Beijing, Shanghai and Guangzhou in the PRC and Taipei and
Kaohsiung in Taiwan. End note.)


6. (C) Comment: Pu's letter suggests that the PRC believes
that progress on a comprehensive agreement that would
include cargo flights is unlikely before the December 3
elections. Now the Chen Administration must decide whether
progress on any sort of charter flights might provide a
political boost that would outweigh the possible perception
the government had made a concession to the PRC on cargo
charters. At the same time, the administration must
consider the possibility that delay until after the
election will risk the feasibility of Lunar New Year
charters entirely. The comments by Lin and Chen suggest
that there is the possibility that Taiwan will agree to
move forward soon, possibly even before the election. This
would be a positive step and reinforce each side's
commitment to progress on charter flights, but it would do
little to resolve issues that still stand in the way of
regular cargo and passenger charters. End comment.
Keegan