Home' Asian Aviation : AAV September 2011 Contents AsianAviation | SEPTEMBER 2011 17
a iwanese boutique airline Far
Eastern Air Transport (FAT) has
resumed operations after three
years of bankruptcy, hoping that a
carefully structured route network,
including some destinations in
mainland China , may help put it back on the map.
The carrier beg an flying again in mid-April, with two
round trips per day bet ween Taipei and the Taiwan-
controlled Kinmen islands, a gateway for business
people bound for nearby mainland China .
FAT was planning in mid-year to restart direct
flights between Taiwan and the Cambodian tourist
destination of Siem Reap, site of the famous Angkor
Wat temple ruins, through a partnership with
Cambodia’s Tonlesap Airlines. By September or
October, FAT expects to start 15 direct flights from
Taiwan to the China, targeting less-frequented,
se cond-tier cities rather than the often-packed routes
to B eijing and Shanghai, company spokesman Yang
The Taiwanese carrier previously connected Taiwan
to atypical tourist or business destinations such as the
Pacific island nation Palau and Laoag in the northern
Philippines. The airline now plans to reopen as many of
those routes as possible, Yang says.
As a smaller airline, FAT is trying to corner the
market on lower-density routes to avoid losing out
in competition ag ainst a growing number of Asian
low-cost airlines and rival boutique carriers backed
by major operators, analysts say.
Capturing these markets requires money up front,
according to Dicky Tse, an Asia analyst with aviation and
aerospace consultancy Ascend. “If they can have those
routes back in synerg y with the China routes, there may
still be a good future for Far Eastern, but it may not be
that easy,” Tse says.
A total of 15 China routes were set aside for FAT
after China and Taiwan beg an negotiating reg ular direct
flights in 2008, following improvements in political
relations between the long-time fo es, located just
160km (100 miles) apart, the island’s Civil Aeronautics
Direct flights between Taiwan and the mainland
were all but banned before 2008 because of political
tensions, forcing travellers to make stopovers in Hong
Kong or Macau, stretching what would be two - or
three-hour non-stop flights into a full day of travel.
But two -way trade exceeds US$100 billion a year, and
at least 750,000 Taiwanese business people and family
members live in China.
Mainland Chinese airlines and five other carriers from
Taiwan have claimed the rest of a total of 370 routes, a
number expected to increase to 558 following a deal to
let non-group tourists from China visit the island from
28 June. Taiwan’s two largest carriers are China Airlines
and EVA Airways.
Final decisions on FAT’s destinations in China and
flight schedules rest largely with the t wo g overnments.
“Cross-Strait exchanges are so reg ular now that finding
a market shouldn’t be a problem,” Yang says, referring
to trips across the Taiwan Strait that divides Taiwan
from China . “ The biggest challenge will be to meet the
requirements of aviation authorities and go along with
But wherever Far Eastern lands in China, business
won’t be bad, analysts say.
“Since the [airline’s] new administration has come in,
FAT is committed to flying – and crossing the Taiwan
Strait is the next step,” says Chen Yi-lee, aviation analyst
with SinoPac Securities in Taipei. “ There’s still a passenger
need for Kinmen and for flights overseas.”
In February 2008, the airline that started out 54 years
ago as a charter ser vice fell into bankruptcy amid financial
problems and pay disputes. The carrier owed more than
NT$10 billion (US$348 million) in debt at that time,
local Taiwan media reports say. FAT quit flying in May
that year, leaving a number of its red and white Boeing
MD-82 aircraft parked at the Taipei airport. The carrier
declines to give details on what led to the financial woes.
A year later a Taipei court granted the airline
permission to do a corporate reorganization. Most
of the reorganization has now been done, the
Far Eastern spokesman says, with the rest due for
completion by year’s end.
FAT shares will no longer be traded over the
counter, as they were before 2008. The only
shareholder is Chang Kang-wei, chairman of Huafu
Enterprise Co., the company that restructured
the airline. In the wake of the restructuring , FAT
has kept its ten-aircraft fleet – which includes two
Boeing 757s alongside the MD-82s and -83s – its
name and some previous employees. Today’s staff
numbers about 500.
“ If they can have those routes back in synergy with the China
routes, there may still be a good future for Far Eastern, but it
may not be that easy.” – Ascend analyst Dicky Tse
Ralph Jennings / Taipei
Taiwan’s FAT bounces
back from bankruptcy
Far Eastern has held onto its ten-aircraft
fleet of Boeing 757s and MD-80s.
2/09/11 5:51 PM
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