Taiwan is entering the increasingly crowded regional budget air travel market amid growing links with mainland China and its burgeoning tourism industry.
Privately owned TransAsia Airways announced on Wednesday that it would set up Taiwan's first low-cost carrier (LCC), while government-linked China Airlines expects to unveil its own contender next month.
"Budget air travel is a global trend. Taiwan will not be absent when foreign LCCs are flying into Taiwan," TransAsia chairman Vincent Lin said at a press conference here to introduce the new LCC, tentatively named People's Airways, pending a naming contest's results.
The carrier will be wholly owned by TransAsia, which began operations in 1951 and now flies 48 routes to places such as China, Japan, South Korea, Singapore and Thailand.
Mr Lin said the LCC will be operational in a year, with Airbus A-320 and A-321 aircraft flying to cities in a five-hour flight range from Taiwan. He said initial investment would be between NT$2 billion (S$85 million) and NT$3 billion.
TransAsia is the first operator to have won formal approval from Taiwan's Civil Aeronautics Administration (CAA) to set up a budget carrier since July, when the government lowered the threshold for establishing an airline from NT$10 billion to NT$6 billion in annual revenue.
The authorities hope the move will encourage the creation of the island's own budget carriers in the face of an unremitting trend, as well as fan the growth of its tourism sector.
Visitor arrivals to Taiwan have been growing by double digits in recent years, reaching 7.3 million last year.
Part of that growth stems from the launch of direct flights between the island and mainland China in 2008.
From 36 flights connecting 13 cities a week then, cross-strait air travel now spans 670 flights and 64 cities. Mainland tourists make up one-third of all visitor arrivals to Taiwan. Last month, Shanghai-based Spring Airlines launched a thrice-weekly service between Pudong and Kaohsiung, becoming the first LCC to operate a cross-strait service and the 12th to enter the Taiwan market since 2005.
Budget air travel accounts for only 6 per cent of Taiwan's non-domestic flights, CAA data shows, far below the Asia-Pacific average of 20 per cent. China Airlines, Taiwan's largest carrier, has said it is likely to announce plans for a n LCC at the end of the year. But Eva Airways, the other major Taiwanese operator, has dismissed the possibility of entering the fray.
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