Low-cost Chinese airlines target expansion in Taiwan

Two mainland budget airlines have expressed interest in starting flights to and from Taiwan, a welcome first for the island where businesspeople complain of high fares owing to strong demand for major routes.

Spring Airlines and Juneyao Airlines, both discount carriers based in Shanghai, aim to begin flying to Taiwan, a boom market for mainland carriers since 2008 when the first scheduled direct flights began transporting eager investors and tourists, aviation officials in Taiwan say.

Airfares could drop from the average Shanghai-Taiwan round-trip price of NT$15,000 (HK$3,859) to less than NT$10,000, analysts say. Budget carriers in China normally charge 30 per cent less than the market rate because they do not provide food, entertainment or duty-free shopping during flights.

"They would have a market here," said Tina Chen, an aviation analyst with SinoPac Securities in Taipei. "The most common passengers are businesspeople, and they are most concerned with safety and being on time."

Taiwan and the mainland, after six decades of political hostilities, set aside their differences in 2008 and for the first time began allowing each other's airlines to operate regular direct flights en masse, sparing businesspeople costly stopovers in Hong Kong or Macau.

Those direct flights, which now total 616 a week, have also brought millions of mainland tourists to Taiwan following a separate agreement signed in 2008.

But Taiwan lacks a budget airline, which is not unusual for China, where discount carriers account for less than 10 per cent of all flights, said Eric Lin, a transport analyst with UBS Securities in Hong Kong. Low-cost carriers account for about 20 per cent of flights in Asia as a whole.