CROSS-STRAIT CHARTERS COULD START IN MAY

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 000271

SIPDIS

SIPDIS

STATE PASS USTR
STATE FOR EAP/TC
COMMERCE FOR 3132/USFCS/OIO/EAP/WZARIT
TREASURY FOR OASIA/LMOGHTADER
USTR FOR STRATFORD, ALTBACH

E.O. 12958: DECL: 02/02/2017
TAGS: EAIR ECON PREL CH TW
SUBJECT: CROSS-STRAIT CHARTERS COULD START IN MAY

REF: A. TAIPEI 246


B. TAIPEI 133

C. 06 TAIPEI 4173

Classified By: AIT Acting Director Robert S. Wang, Reason 1.4 d


1. (C) The airline executive who nominally represents
Taiwan in cross-Strait discussions on cargo and weekend
passenger charter flights told AIT that nearly all
outstanding technical issues had been resolved. However,
he is not sure how the timing of an announcement will be
affected by ongoing discussions on tourism. He
speculated that the earliest possible date for
implementation of new charter flights would be May 1.
The two sides have tentatively agreed to 24 roundtrip
passenger flights per week. This volume is not enough to
have a major impact on cross-Strait travel. End summary.

Link to Tourism Could be Problematic
--------------


2. (C) Taipei Airlines Association Chairman Tony C.C. Fan
told AIT on February 1 that Taiwan and China had resolved
nearly all technical issues related to frequent cargo and
weekend passenger charter flights in the last meeting in
Macau. However, he was not sure how the timing of an
announcement on charter flights would be affected by
ongoing discussions on tourism. Fan concurred with media
reports that an agreement on tourim was also nearing
completion. He reported that Civil Aviation
Administration of China Director of Taiwan Affairs Pu
Zhaozhou, who leads the charter flight negotiations for
China, told Fan that agreements on tourism and charter
flights would have to be announced together. Yang Yi,
the spokesman for the PRC's Taiwan Affairs Office, told
the press Wednesday that the two were closely linked and
the PRC wished to implement them at the same time.


3. (C) Taiwan wants to implement tourism first and
charter flights later. Fan noted that the Taiwan
Solidarity Union's (TSU) persistent opposition to
passenger charter flights could cause the Chen
administration to insist that the tourism deal come first.
Mainland Affairs Council (MAC) Chairman Joseph Wu and
other senior MAC officials this week have publicly
emphasized that tourism and charter flights are being
negotiated separately. However, a February 1 media
report cited an unnamed senior MAC official as saying in
the end agreements on passenger charters, cargo charters
and tourism could evolve into a "three-in-one"
announcement. Fan speculated that the anonymous MAC
comment may have been planted in order to test reactions
from the TSU and the public overall.

May 1 Take Off?
--------------


4. (C) On the possible timing, Fan said announcements on
charter flights or tourism were both unlikely before the
Lunar New Year holiday, which begins on February 17. By
the time officials come back to work on both sides of the
Strait, he suggested that the earliest realistic timing
for an announcement would be mid-March. If the two
agreements are implemented simultaneously, Fan believes
that May 1 would be the earliest possible implementation
date. He pointed out that travel agents would need one
to two months to make necessary arrangements, but charter
flights would take less time.

24 Weekly Roundtrip Passenger Flights
--------------


5. (C) Fan described the consensus reached on technical
arrangements for charter flights. There would be 24
weekly roundtrip flights for weekend passenger charters.
Taiwan and China would each fly 12. The flights would
operate from noon on Friday through the end of the day on
Sunday. On media reports that the two sides had agreed
that foreigners would be permitted to purchase tickets
for charter flights, Fan said that the PRC had previously

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objected to any agreement that specified foreigners as
eligible passengers because this might give the
appearance of international flights. Fan said Taiwan
negotiators proposed wording that simply opened the
flights to anyone with valid travel documents. PRC
negotiators had not objected to the proposal, according
to Fan, but neither had they explicitly agreed.


6. (C) For frequent cargo charters, Fan told us that the
two sides had agreed to a total of 60 roundtrip flights
per month. Each day there would be one Taipei-Shanghai
and one Taipei-Guangzhou flight. One day, a Chinese
airline would fly the Guangzhou route and a Taiwan
airline would fly the Shanghai route. The two sides
would switch routes each day. Fan commented that the
problem with cargo charters was although flights from
Taiwan to China would be full, airlines would have
trouble filling capacity in the other direction.

Comment - Moving Forward...Slowly
--------------


7. (C) Public signals from officials on both sides of the
Strait and Fan's private comments both suggest that
progress is being made on the charter flights and tourism
initiatives. News that foreigners might be permitted to
use the new charter flights is especially welcome to the
foreign business community. However, the timeline for
these discussions has been pushed back so many times it
is difficult to put too much confidence in speculation
about implementation on May 1.


8. (C) In addition, the number of passenger charter
flights under discussion is too low to have a major
impact on cross-Strait travel overall. An additional 24
round trip flights per week added to the current schedule
of holiday charter flights still only yields a total of
less than 4,000 one-way flights per year. By comparison,
more than 53,000 Hong Kong and Macau flights landed in or
took off from Taiwan's airports in 2005. Most passengers
on those flights connected to or from PRC destinations.
Some cross-Strait travelers passed through other airports
in the region like Cheju, South Korea, as well. To have
a real impact on Taiwan's economy, charter flight
frequency will have to be expanded dramatically. End
comment.
WANG