Identifier | Created | Classification | Origin |
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09TAIPEI514 | 2009-04-30 09:39:00 | CONFIDENTIAL | American Institute Taiwan, Taipei |
VZCZCXRO3021 OO RUEHCN RUEHGH RUEHVC DE RUEHIN #0514/01 1200939 ZNY CCCCC ZZH O 300939Z APR 09 FM AIT TAIPEI TO RUEHC/SECSTATE WASHDC IMMEDIATE 1474 INFO RUEHOO/CHINA POSTS COLLECTIVE RUEHWL/AMEMBASSY WELLINGTON 2457 RUEHCHI/AMCONSUL CHIANG MAI 0717 RUEHHM/AMCONSUL HO CHI MINH CITY 0580 RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC RUEATRS/DEPT OF TREASURY WASHDC RUCPDOC/DEPT OF COMMERCE WASHDC RUEAIIA/CIA WASHDC RHEFDIA/DIA WASHINGTON DC RHHMUNA/USPACOM HONOLULU HI |
C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 000514 |
1. (SBU) Summary. The response in Taiwan to the agreement on passenger and cargo flights signed on April 26 in Nanjing (Reftel) has been mainly positive. Most industry representatives applaud the increase in the number of flights and more destinations. Some, however, question why only certain flights were designated as "regular" flights while others continue to be charter flights. The absence of Fifth Freedom Rights from the Nanjing April 25-26 agenda is seen by some here as evidence that the Ma administration's cross-Strait economic policy is not bringing as much benefit to the island's economy as it can. End Summary 2. (SBU) On April 26 in Nanjing, the chairman of Taiwan's Straits Exchange Foundation (SEF), P.K. Chiang, and his PRC counterpart, Association for Relations Across the Taiwan Strait (ARATS) Chairman Chen Yunlin, signed an agreement on cross-Strait passenger and cargo flights. The agreement increased the number of passenger flights from 108 to 270 per week - 135 from each side of the Strait - and added six additional destinations in the PRC. The agreement increased the number of cargo flights from 7 to 28 per week; 14 from each side, 7 each to Shanghai and Guangzhou. In addition, flights to and from Taipei's Taoyuan airport and Kaohsiung airport are designated "regular" flights, while those to and from Taiwan's other airports are still considered charter flights. Airlines can operate regular flights to and from all destinations in China. 3. (C) The reaction from Taiwan industry has tended to emphasize the positive aspect of more frequent flights. For example, Taipei Airlines Association (TAA) Secretary General Bruce Wang told us the agreements met expectations because the increase in the number of flights was a need both sides recognized. China Airlines (CAL) Senior Vice President Jenny Lee said the increase is acceptable to the carriers, although they would have liked the number to be even larger. Similarly, Eva Airways (EVA) Vice President Danny Ho told us that, while EVA welcomes the increase, the airlines would ultimately like to see an open skies agreement between Taiwan and China. According to Ho, when market forces are allowed to determine the number of flights each airline will operate, and to which destinations, then carriers will earn the maximum possible revenue. 4. (C) The private sector response recognizes that the SEF-ARATS talks on passenger and cargo flights have reached a phase where technical issues may limit the extent to which cross-Strait service can expand. For example, Taiwan contacts tell us the lack of increase in the number of flights to Beijing and Shanghai is at the request of China, which claims that it does not want to overtax the air-traffic control system at these airports. Another example is the limitation of regular flights to only Taoyuan and Kaohsiung airports. TAA's Wang explained that flights to and from downtown Taipei's Songshan airport will continue to be designated as charter - not regular - fights because Songshan does not have the capability to handle large cargo freighters. Larger airplanes will fly between Taiwan's Taoyuan and Kaohsiung airports and the PRC's Shanghai and Guangzhou airports and will be designated regular flights. CAL's Lee said that more rigorous customs screening procedures at Guangzhou airport is delaying cargo shipments, with the result that Taiwan's airlines will seek to operate more cargo flights to Shanghai. 5. (C) Taiwan's airlines have acknowledged additional benefits resulting from the talks. In particular, the agreement signed by Chiang and Chen in Nanjing authorizes Taiwan airlines to establish representative offices in the PRC. CAL's Lee told us this will make it much easier for airlines to transfer funds across the Strait, and should facilitate ticket sales in the PRC. EVA's Ho said the TAIPEI 00000514 002.2 OF 002 expansion of direct flights to additional cities in China will allow more Mainland tourists to come to Taiwan, an assertion echoed by other observers of Taiwan's economy. TAA's Wang was more skeptical, saying that although adding flights to these second tier Mainland cities is "better than nothing," he does not expect Taiwan carriers to add flights to any of those points until travel agencies have realistic estimates of likely demand. 6. (C) Although the Ma administration has characterized the SEF-ARATS flight agreement as a boon to Taiwan (Reftel), there has been criticism that the agreement does not benefit Taiwan as much as it does the PRC. Specifically, the opposition DPP and other critics assert that Taiwan would benefit most from Fifth Freedom Rights, and claim the Ma administration should have exerted more effort to get China to at least discuss the issue at the SEF-ARATS talks. Industry representatives, though, tend to take a less political line in assessing the issue. TAA's Wang told us that although Fifth Freedom Rights were not included in this round of discussions, he understands it can take years to reach agreements between economies covering the full range of civil aviation rights. CAL's Lee told us the airlines understand the issue is politically sensitive. She noted that public statements by officials on both sides appear inconsistent. According to Lee, the director of Taiwan's Civil Aeronautics Administration has stated that discussion of Fifth Freedoms would continue, whereas an official of the Civil Aviation Authority of China has said the complexity of the issue requires further study before discussions can resume. Lee said Taiwan's airlines do not expect to be allowed to operate onward flight from cities in the PRC to destinations in Europe or North America in the foreseeable future, but she added they will nonetheless continue to urge the issue be included in cross-Strait negotiations. (Note: In the past, U.S. airlines operating in Taiwan have said they do not anticipate operating onward flights from PRC destinations and thus do not see Fifth Freedom Rights as significant for their operations in Asia. End Note.) 7. (C) Comment. Critics of the Ma administration have seized on the Fifth Freedom issue and various other aspects of the recent agreement on passenger and cargo flights as evidence that the SEF-ARATS talks and related agreements have benefited the PRC more than Taiwan. The generally more positive response from industry sources, however, suggests that the agreement is a positive step that will boost the island's economic growth. End Comment. YOUNG |