China Airlines cuts flights a day after Singapore Air
Updated: 2009-02-18 07:16
By Lillian Liu(HK Edition)
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HONG KONG: A day after Singapore Airlines announced it will cut flights to Vancouver, China Airlines said yesterday it must suspend three cargo flights amid weak demand.
And analysts said more airlines are likely to follow suit as the global recession spreads.
"The demand is so weak these days, it is only normal for airline companies to halt flights to reduce costs," said Cho Fook-tat, an aviation analyst at Taifook Securities.
The flight suspension is expected to help Taiwan-based China Airlines, which has 20 Boeing 747-400 freighters, trim NT$500 million ($15 million) from operation costs, Taiwan News said yesterday, citing airline spokesman Bruce Chen.
"Use for cargo carriers falls because of dropping imports and exports, and our income can't cover costs," Chen said.
Forecasting a further contraction of exports in the first half of 2009, the airline is likely to ground more cargo planes if necessary, the news website said.
The grounded cargo flights will be stored at a desert area in California, and the maintenance costs will be $100,000 per year, which is cheaper than leaving the aircraft in airports, according to China Airlines.
The carrier's January sales fell 18 percent from a year earlier, after plunging 24 percent in December, according to filings to the Taiwan Stock Exchange.
Singapore Airlines said Monday it will halt flights to Vancouver effective April 25, calling the decision "most regrettable", as the route had received fewer passengers.
Singapore Air has flown to the western Canadian city for more than 20 years. Its carrier flies to Vancouver through Seoul, South Korea, three times a week. The suspension was said to be indefinite.
The world's biggest airline by market value, Singapore Air said last month that it was planning to cut flights to the US, Europe and Asia as demand dried up.
The airline said its October-to-December profits fell 43 percent as it flew 4.2 percent fewer passengers.
Back in Taiwan, the island saw a record drop of 44.1 percent in its exports in January as demand for its products slackened around the world.
Its exports for the month totaled $12.37 billion, down $9.76 billion from a year earlier, marking the fifth-consecutive monthly decline.
Taiwan, home to the world's leading contract makers of electronics, saw its electronic-product exports fall 45.3 percent, year-on-year.
(HK Edition 02/18/2009 page16)