Mandarin Airlines looking to suspend Hualien routes over low demand

Taipei, April 8 (CNA) Mandarin Airlines is hoping to suspend flights it operates between Hualien and Kaohsiung and Taichung, Chairman Chen Ta-chun (陳大鈞) said Wednesday, citing weak demand and rising losses.

Load factors on the two routes have fallen to just 20-30 percent, with one Kaohsiung-Hualien flight carrying only five passengers last year, Chen told reporters.

He said there was no point continuing to try to make the routes successful, especially since they could lose about NT$70 million (US$2.2 million) annually based on current fuel prices, Chen said.

The war in the Middle East has pushed fuel costs from 13 percent to 21 percent of total expenses, and Chen warned that the airline's losses could reach 10 percent of projected annual revenue of NT$6 billion.

Chen noted that the airline would not be able to pass those cost increases on to passengers because domestic base fares have remained unchanged for 26 years.

But even if Mandarin Airlines had the option to raise prices, it would not be able to because of weak demand. In fact, Chen said, the Hualien routes have remained unpopular when fares have been cut.

"Even halving prices hasn't boosted demand," he said.

By contrast, flights to outlying islands remain strong, with Kaohsiung-Matsu load factors at 94 percent and Kaohsiung-Kinmen flights nearly full.

"We are willing to operate routes to Kinmen because there are no alternatives," Chen said. "But Hualien has rail and road options."

The airline currently runs three weekly Taichung-Hualien flights and daily Kaohsiung-Hualien services.

Chen said the carrier hopes regulators will agree to the suspension, though no formal application has been made, and allow capacity to be shifted to more profitable routes, with flights restored if transportation disruptions occur.

In response, the Civil Aviation Administration (CAA) said it understood the situation and will evaluate the routes.

In Taiwan, domestic route adjustments must be filed with and approved by the CAA in accordance with the Civil Aviation Act.