October 4, 2017 4:34 pm JST

Ousted EVA Airways chairman retaliates with new airline

Chang Kuo-wei plans new international carrier, a first in 30 years for Taiwan

JASON TAN, Contributing writer

Taiwan’s StarLux Airlines founder Chang Kuo-wei was ousted as chairman of Eva Airways after a succession brawl erupted following his father’s death in January 2016.

TAIPEI -- A leading Taiwanese aviation executive has a big dream -- to launch the island's third major commercial carrier as the "Emirates of Taiwan."

That dream may be closer to fulfilment than expected. StarLux Airlines has begun preliminary preparations for takeoff from Taiwan Taoyuan International Airport by the end of 2019 -- making it Taiwan's first possible international aviation entrant in 30 years. 

"I want to bring Taiwanese airline brands to the world stage, breaking the stereotypes that we don't have quality carriers, and that Taiwan is notorious for its aviation safety record," said StarLux founder Chang Kuo-wei, singling out Gulf-based Emirates as the model to emulate. 

Dubai's Emirates is currently the world's biggest long-haul airline with the largest fleets of Airbus 380s and Boeing 777s. Its network takes in over 150 destinations and more than 80 countries.

"Many Taiwanese are afraid of flying due to our poor safety record," Chang said during a talk on Sept. 14 when he shared details about his latest ambitions and promised the highest standards. More than 2,000 people were listening. 

Chang said he had given his "life and soul" to EVA Airways, and that Evergreen Group's position in the airline industry had benefited considerably from his aviation expertise. He said that EVA Airways is carrying a lot of baggage, and that he will have full control of StarLux as a one-man show.

Taiwan currently has two major carriers: EVA Airways and China Airlines. Chang became chairman of EVA in January 2013. When his father, Evergreen Group founder Chang Jung-fa, died in January 2016, a succession brawl erupted among his children, and Chang was eventually removed as chairman. Evergreen is the parent of Eva Airways, and Chang no longer holds any executive position in the group.

In 2017, Forbes magazine estimated the Chang family's net worth to be $1.45 billion, making it Taiwan's 31st richest. Local media have suggested Chang may be prepared to invest 6 billion New Taiwan dollars ($198 million) in Starlux himself. He reportedly shared an inheritance of NT$17 billion with his mother, the second wife of Chang Yung-fa. He also retains a substantial shareholding in Evergreen Group. Partnership arrangements have yet to be clarified, but a StarLux spokesman said earlier in the month that "some investors have agreed to come on board."

The Chang family feud is part of the general turbulence to have hit Taiwan's skies in recent years. The country's first commercial airline, TransAsia Airways, abruptly halted services in November last year when it became insolvent. It suffered two crashes seven months apart in 2014 and 2015, killing 91 people in total. TransAsia reportedly paid close to NT$1.2 billion ($39.7 million) in family settlements, and was bleeding up to NT$300 million a month in its final stages.

While Chang, a certified Boeing 777 pilot, sees clear skies ahead for his ambitious plan, there remain many obstructions on the ground before StarLux opens the departure gate.

Taiwanese regulations require a company to have been in operation for five years with combined annual revenue of NT$6 billion over the past three years to qualify for entry into the aviation business. If it plans to fly internationally, the company must also have been engaged in international trade or transport for five years.

Taiwan's regulators have proposed adjusting these regulations, which are over 20 years old. The transportation and communications ministry houses the aviation authority, which will consider amendments at the end of this month that could lead to some loosening of qualifications.  

Aircraft and air traffic agreements are relatively easy to acquire when establishing new airlines. However, carriers must also secure runway slots to operate, Ho Nuan-hsua, chairman of China Airlines, recently noted.

"Existing agreements on time slots were forged over lengthy discussions between carriers and regulators, and airlines are not likely to give them up -- at least not us," Ho told the Taipei Times.

Given the shortage of favorable times, Ho said new entrants will face difficulties if they only offer late or overnight "red-eye" flights.

According to Jan Sheng-yuan, an aviation analyst at the Taiwan Institute for Economic Research, StarLux may stand its best chance transiting passengers from North America through Taiwan to Southeast or Northeast Asia.

"This transit segment is growing very fast, and offers better profit margins," he said. That strategy should also provide a shield against the fierce competition from budget airlines focusing mostly on all-Asian routes.

Despite the obvious hurdles, Chang is already pressing ahead with recruitment from an office in downtown Taipei.

"We are aggressively preparing for the setup of Starlux Airlines," the company announced on an employment website. "We expect to operate by the end of 2019, and will strive to be an international top-tier carrier."

Local media have reported that StarLux plans a fleet of 24 aircraft with a staff of 3,500 within its first six years. Its initial target destinations in 2019 are in Asia -- Bangkok, Hong Kong, Jakarta, Kuala Lumpur, Macau, Singapore, and Tokyo. The following year, it will launch long-haul flights to the U.S. west coast.

Nikkei staff writer Cheng Ting-fang contributed to this report. 

 

Asia300

EVA Airways Corp.

Taiwan

Market(Ticker): TAI(2618)
Sector:
Industry:
Transportation
Airlines
Market cap(USD): 2,057.48M
Shares: 4,173.44M
Asia300

China Airlines Ltd.

Taiwan

Market(Ticker): TAI(2610)
Sector:
Industry:
Transportation
Airlines
Market cap(USD): 2,108.81M
Shares: 5,470.89M

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