The weather was cold but the atmosphere was warm at Pudong International Airport in Shanghai on the morning of January 26, 2003. A passenger plane belonging to Taiwan-based China Airlines descended against the backdrop of a wintry sky to land on the tarmac. The aircraft slowly taxied to the gate and after its door opened, a wave of applause greeted the guests of honor, who came from both Taiwan and mainland China. Since contacts between the two sides were suspended in 1949, this was the first time a Taiwan carrier had landed in the mainland.
The China Airlines flight was followed by five other Taiwanese carriers that sent charter planes to Shanghai, the center of the Yangtze River delta inhabited by an estimated 300,000 Taiwanese. The flights continued during the Lunar New Year holiday that year from late January to early February, with their mission to transport Taiwanese businesspeople back home at a traditional time of family reunion. However, the ice that characterized cross-strait relations in the past was too thick to be broken completely overnight. No mainland air carriers took part at the time and all of the Taiwanese planes still had to land in Hong Kong before continuing on to Shanghai. In fact, the flights were mostly symbolic, as their routes did not differ much from conventional ones, although passengers were not required to change flights during the stopover.
In the past, those conventional routes meant Taiwanese travelers had to transfer to a separate flight at an intermediate location, usually Hong Kong or Macau, before flying to cities in the mainland. As the transfer takes between one and two hours in most cases, traveling on such a route wastes time, especially when the destination cities are not in southern China, for which Hong Kong is a natural gateway. For example, passengers bound for Beijing, which is located some 1,700 kilometers north of Taipei, first have to fly southward to Hong Kong before traveling northward to their final destination. The detour makes the trip at least 1.4 times longer than the shortest possible flight route between the two cities.
New Year Model
The transportation model for cross-strait travel saw some improvement in 2005. All the charter flights responsible for cross-strait routes during the Lunar New Year holiday had to fly over Hong Kong airspace before proceeding to their destinations, but they did not need to land at the former British colony as before. Mainland carriers were allowed to land at Taiwan's airports for the first time, marking another breakthrough in the history of cross-strait traffic. Soon this "new year model" extended to three major national holidays, starting with the Mid-Autumn Festival in September 2006, followed by Tomb-Sweeping Day and Dragon Boat Festival in 2007.
Similarly, formal sea links between Taiwan and mainland China have been only partially established. The Offshore Shipping Center (OSC) in Kaohsiung Harbor started operations in April 1997, allowing container ships registered outside of Taiwan and mainland China to transport goods directly between the port city in southern Taiwan and Fuzhou and Xiamen on the southeastern coast of mainland China. However, the route can only be used for the transshipment of goods exported to or imported from a third place, although those goods are allowed to be processed at Kaohsiung Harbor on the condition they do not pass through customs.
The OSC has helped to boost the status of Kaohsiung Harbor and Taiwan's shipping-related businesses, but its performance has been less than impressive so far. From 2000 to 2007, the center handled some 4.7 million twenty-foot equivalent units (TEU) in container traffic, or just 6.5 percent of the total 71.5 million TEUs processed by the harbor.
One major reason for the OSC's lackluster performance is that only two ports on the mainland take part in the cross-strait direct shipping initiative, according to Lai Wei-shen, a section chief in charge of navigation affairs at the Ministry of Transportation and Communications (MOTC). In 2004, the Republic of China (ROC) government added Taichung Harbor and Keelung Harbor to the project, in central and northern Taiwan respectively, but mainland China did not recognize their status as OSCs. As a consequence, cargo can be shipped directly between Taichung or Keelung harbors and ports in mainland China only if it is traveling both from a third place and to a third place.
For goods originating in Taiwan or mainland China and destined for the other side of the Taiwan Strait, ships still have to call at a third port, usually Hong Kong or Japan's Ishigaki Island, before proceeding on their way. All carriers making such a detour face additional costs in terms of payments for paperwork processing fees and extra travel time.
For example, a glance at a map shows the mainland China city of Shanghai is located northwest of Keelung Harbor in northern Taiwan. Currently, however, a cargo ship setting out from Keelung for Shanghai and carrying goods originating from Taiwan destined for the mainland market would first have to head some 270 kilometers east of Taiwan to detour via Ishigaki Island. A direct route from Keelung to Shanghai could save at least 12 hours on shipping time as well as save fuel and eliminate the extra payments associated with the enforced stop on the current route.
To sum up, although direct air and sea links have been partially established for some years now, they have yet to satisfy the growing demand for passenger and cargo transportation. For Chang Wu-ueh, director of the Graduate Institute of China Studies at Tamkang University, the current state of cross-strait transportation links is unreasonable, considering the large flows of people and cargo between Taiwan and mainland China.
According to the scholar, of all the money invested by Taiwanese outside of Taiwan since 1991, more than half has gone to mainland China. Presently mainland China receives about 40 percent of all Taiwanese exports, and last year of the nearly nine million Taiwanese who traveled outside Taiwan, some 4.13 million chose mainland China as their destination. "The lack of convenient cross-strait travel runs counter to the worldwide trend toward globalization," he adds.
Passengers board a charter plane in Hualien, eastern Taiwan, heading non-stop for Guangzhou in southern mainland China. As cross-strait tensions ease, transportation links are being normalized. (Photo by Central News Agency)
Sea Change
The situation across the Taiwan Strait began to change noticeably soon after President Ma Ying-jeou took office in May. Ma's ruling party, the Kuomintang, is generally perceived as leaning more toward closer relations with mainland China than the Democratic Progressive Party, which ruled Taiwan between 2000 and 2008.
On June 13 this year, Chiang Pin-kung, chairman of the Taiwan-based Straits Exchange Foundation, and his mainland counterpart Chen Yunlin, chairman of the Association for Relations Across the Taiwan Straits, met in Beijing to sign agreements to allow direct charter passenger flights across the Taiwan Strait on a regular basis. Those flights, which run on weekends, that is, from Friday to Monday, began on July 4.
Taiwan and mainland China opened up eight and five airports respectively for the flights, although the air carriers involved now choose to land at only two of the airports open to them in Taiwan. By October, there were 18 flights in each direction offered by 11 airlines from Taiwan and mainland China, connecting Taiwan Taoyuan International Airport in northern Taiwan and Taipei Songshan Airport in downtown Taipei City with airports in Beijing, Shanghai, Nanjing, Xiamen and Guangzhou in mainland China. According to the agreement reached at the June 13 meeting, six more airports will be opened on the mainland side, including the inland cities Chengdu and Chongqing, with discussion on the issue expected at a second round of talks that were scheduled for November.
The market response to the flights has been quite positive to date. According to the Civil Aeronautics Administration (CAA) under the MOTC, the average occupancy rate of the cross-strait flights has been about 86 percent and more than 180,000 passengers had traveled between the two sides via the flights by the end of September. Most of those passengers were Taiwanese travelers doing business or sightseeing on the mainland as well as mainland tourists, who were cleared to visit Taiwan as part of a tour group in accord with the agreement signed in June.
However, there is room for improvement in regard to the flights. Currently, the path of the "direct" flights differs little from previous routes, with the result that the total flight distance, and hence fuel consumption, is similar, keeping flight costs high. Another issue is the limited number of flights.
"It's quite difficult to book a direct flight to Taipei on Friday or Monday, because mainland tourists visiting Taiwan often depart from or return home on the charter flights on these two days, " says Green Kuo, a Taiwanese commercial designer living in Beijing. In addition, the direct charter flights are often more expensive than taking one of the conventional routes--in September a round trip on one of the direct charter flights to Taipei cost Kuo RMB$4,200 (US$614), compared with RMB$3,500 (US$511) on a conventional route, which for him usually means a trip via Macau. Still, the designer prefers the charter flights, since the travel time between Beijing and Taipei can be cut from six to four hours.
One reason for the higher price of the direct flights is because of a ban on charter passenger flights also carrying commercial cargo. That issue and others, such as the limited number of cross-strait flights, were scheduled to be addressed in the negotiations between Taiwan's Chiang Pin-kung and mainland China's representative Chen Yunlin, which were to take place in Taipei.
On the agenda for both sides was to be the issue of cross-strait flights following the shortest distance between the two sides without having to detour through the airspace of a third region such as Hong Kong as they are required to do now. For a trip from Taipei to Beijing, for example, such a direct route could reduce the flight time to three hours.
Also planned were talks on increasing the number of cross-strait flights as well as the number of airports in mainland China open to the flights. The normalization of cross-strait sea links, the launch of cross-strait charter cargo flights and a lifting of the ban on charter passenger planes carrying cargo were other major issues scheduled for the meeting.
"The principle of the negotiations is to shorten the routes and save on fuel. The expenditure on fuel already accounts for more than 40 percent of a carrier's operational cost," says Lee Long-wen, director-general of the CAA.
Crew members from Taiwan-based China Airlines and mainland China's Hainan Airlines pose together after the initial direct cross-strait flight made by the carrier based in Hainan, an island province off the southern coast of mainland China. (Courtesy of China Airlines)
Up in the Air
The negotiations over direct cross-strait flights, however, have not proceeded without some controversy, with national security the major concern. For that reason, no talks are scheduled about direct flights between Xiamen and Taiwan via the shortest possible route, which would cross the militarily sensitive "middle line" dividing the narrow Taiwan Strait, Lee says.
Another issue is national sovereignty: should the cross-strait flights be called international or domestic flights? "Both sides understand that such a highly political question should be shelved for now so that the rest of the negotiations can go smoothly," says Deng Dai-hsien, an associate research fellow at the National Policy Foundation.
Having generally agreed on the politically neutral name "cross-strait flights," Taiwan and mainland China accept that building closer transportation links is a more urgent and practical issue than solving ideological differences. Take cargo transportation by air, for example. With direct links, China Airlines estimates the cost of transporting goods across the Taiwan Strait could decrease between 30 and 35 percent. As a result, Deng says, Taiwanese as well as international enterprises doing business with mainland China would be more willing to set up headquarters or regional headquarters in Taiwan and perhaps consider moving part of their production facilities to the island, since it would no longer be too costly to travel or transport large quantities of goods across the strait.
If the plans for more direct flights can be realized, more mainland tourists might also be willing to visit Taiwan partly because of the cheaper and more convenient flights offered to them. By mid-September, the equivalent of 226 mainland tourists per day were arriving in Taiwan.
With the launch of direct cargo flights, postal services also would be more convenient. Currently mail travels from Taiwan to mainland China through either Hong Kong or Japan. On average, the postage cost and delivery time for cross-strait services could be at least halved through a direct mail route, according to Huang Shu-chien, vice president of Taiwan's Chunghwa Post Co.
Transportation operators would certainly be another beneficiary of closer cross-strait links. "Our company's growth in revenue can be anticipated thanks to the convenience of direct cross-strait travel, although the number of mainland China-bound passengers taking our Hong Kong route will decrease," says Bruce Chen, vice president of China Airlines' public relations division. Both China Airlines and Eva Air, the two largest Taiwanese carriers, are among the world's top 10 players in terms of freight traffic. "Once cross-strait air links for cargo transportation are opened, Taiwan could become the transfer hub for the cargo traveling on our planes from mainland China to the rest of the world," Chen says, adding that the first cargo routes the air carrier would open would be Taipei to Guangzhou and Taipei to Shanghai.
In the future, Taiwan is also likely to negotiate with mainland authorities over "beyond rights," which would allow Taiwan airlines to fly via mainland cities to final destinations in Europe, for example. Carriers could not only increase revenues by including a stopover in the mainland, but fly shorter routes than they do now. Currently, most Europe-bound Taiwanese planes follow a southern route through Southeast Asia and the Middle East. If a northern route across mainland China and possibly Siberia were an option, three hours could be shaved off the travel time from Taipei to Europe. "Plus, our global flight network would be more complete, which could certainly enhance our competitiveness," China Airlines' Chen says.
Amid the optimism about more direct cross-strait transportation, however, Tamkang University's Chang Wu-ueh is quick to point out that it is not a panacea for Taiwan's sluggish economy. "The links alone won't do much to better Taiwan's economy. They will only give an obvious boost to the economy when the investment environment improves as well," he says.
Posing a Challenge
Similarly, the MOTC's Lai Wei-shen says it will not be easy for Kaohsiung to boost its status as a shipping center even after the normalization of cross-strait sea links. "The container ports on mainland China have been developing at a very fast pace these past few years, posing quite a challenge for Kaohsiung," he explains. Kaohsiung was the world's third busiest port in 1998, but had slipped to eighth place by 2007 in the face of strong competition from ports such as Shanghai and Shenzhen, which were ranked second and fourth respectively in the same year.
On the other hand, although the normalization of cross-strait transportation links has yet to be achieved or generate substantial gains for Taiwan, the moves made by the two sides of the Taiwan Strait toward closer transportation links are creating a harmonious cross-strait atmosphere. This is expected to encourage investors worldwide to put more of their money in Taiwan, says Deng Dai-hsien from the National Policy Foundation. "Fewer risks mean more investments," he explains, adding the "activity of investment is basically a matter of confidence."
Not only enterprises, but all those who wish for stability in the Taiwan Strait are happy to see better interactions between the two sides, which, in turn, would only encourage them to continue on in the current direction. "What would happen if the negotiations break down?" Deng asks. "Taiwan's stock market would plummet an extra 1,000 points in a short time. Mainland China's would suffer greatly, too, and they would be sure to feel pressure from the United States and other world powers that prefer to see stable cross-strait relations. All these factors mean that the two sides need to handle their relations with great care."
Regular travelers like Green Kuo have a strong interest in the outcome of the talks too, as the designer says he could not stand to see cross-strait relations deteriorate and decrease travel options. "Once I started to take the nonstop flights, I always opt for them over the more time-consuming conventional routes," he says. "There's no turning back and asking me to transfer in Macau again."
Write to Oscar Chung at oscar@mail.gio.gov.tw