This record is a partial extract of the original cable. The full text of the original cable is not available.

082257Z Aug 05

UNCLAS SECTION 01 OF 02 TAIPEI 003292 
 
SIPDIS 
 
STATE PASS TO AIT/W 
 
STATE ALSO FOR EAP/RSP/TC 
 
E.O. 12958: N/A 
TAGS: EAIR TW
SUBJECT: TAIWAN: BELATED PROGRESS ON CROSS- 
STRAIT DIRECT LINKS NEGOTIATIONS 
 
 
¶1. Summary. In an August 3 press conference, Premier Frank 
Hsieh announced that Taiwan authorities will grant approvals 
to Taiwan carriers overflying China's airspace, and are 
willing to negotiate with China on passenger/cargo direct 
charter flights.  Most political parties and companies are 
happy both about this announcement, and about the initial 
positive response from China.  Mainland Affairs Council 
(MAC), Ministry of Transportation and Communications (MOTC) 
are working on the fleshing out relevant regulations while 
the designated negotiator Taipei Airlines Association (TAA) 
is awaiting further instructions.  As People First Party 
Vice Convener Sun Da-chien commented, although this good 
news arrives very late, it is "Better late than never."  End 
summary. 
 
Premier's Announcement 
---------------------- 
¶2. In the Aug. 3 announcement, Hsieh explained that the 
decision was made mainly to keep domestic air carriers 
competitive by cutting down on flying time and fuel costs. 
He added that he has instructed MAC and MOTC to make all 
necessary arrangements.  When asked whether Taiwan will open 
its airspace to China's air carriers, the Executive Yuan 
indicated that this issue would not be included in the 
negotiation agenda.  In conclusion, EY spokesman Cho Jung- 
tai conveyed Taiwan's hope that this good-will gesture could 
reopen the cross-strait dialogue mechanism. 
 
China Gives Positive Response 
----------------------------- 
¶3. After Premier Hsieh made the announcement, China's Taiwan 
Affairs office spokesman responded that China welcomes this 
statement, and reiterated that they will try to make 
progress on issues to expedite positive interactions and 
maintain cross-Strait peace. 
 
¶4. KMT whip Cho Bou-yuen said that the KMT welcomes this 
announcement.  PFP Vice Convener Sun Da-chien indicated that 
in March 2005 he received information that domestic carriers 
had already received China's approval to overfly China on 
their Taiwan-EU routes.  Sun thinks Premier's announcement 
comes too late, but commented, "Better late than never." 
TSU Secretary General Chen Chen-lung commented that from a 
 
SIPDIS 
cost-saving point of view, the TSU supports this initiative 
on renewed cross-Strait negotiations as long as it is based 
on equal sovereignty status.  CIER President Chen Tien-jy 
said he believed that this initiative would strengthen 
Taiwan-EU economic ties.  Taiwan Electrical and Electronic 
Manufacturers' Association (TEEMA) Chairman Hsu Sheng-hsiung 
suggested that Taiwan authorities follow the current New 
Year charter flight negotiation model to conduct cross- 
strait negotiations as soon as possible.  Even if 
passenger/cargo charter flights cannot be implemented in one 
step, at least the cargo flights might get started.  Hsu 
added that Taiwan authorities should play a role as 
consultant, not negotiator, "because only the carriers know 
the important issues." 
 
Implementation Agencies 
------------------------ 
¶5. Mainland Affairs Council (MAC) explained that its reason 
for approving overflying China and negotiating 
passenger/cargo charter flights was to enhance Taiwan air 
carriers' competitiveness.  MAC said the next step depends 
on China's response.  Although it is acceptable for Taiwan 
to negotiate both passenger and cargo charter flights at the 
same time, Taiwan hopes to negotiate the cargo operation 
first.  According to MAC, it is very unlikely that China 
will propose that their carriers overfly Taiwan's airspace. 
MAC expects to follow the New Year charter flights as a 
negotiation model.   Premier Hsieh subsequently stated 
publicly that Taiwan could not permit Chinese overflights 
for reasons of national security. 
 
¶6. According to Ministry of Transportation and 
Communications (MOTC) Minister Lin Lin-san, carriers who 
want to overfly China airspace only need to get approvals 
from civil aviation authorities from both sides.  MOTC will 
coordinate with MAC to draft regulations for overflying 
China within three days, with EY ratification expected 
within five days.  Once the EY approvals the regulations, 
carriers may submit applications.  On the passenger charter 
flights, EY intends to focus on holidays first, in line with 
China's earlier offer to allow such flights. 
 
¶7. Civil Aeronautics Administration (CAA) Director General 
Billy Chang said that once the overflight regulation is 
approved by EY, CAA will complete carriers' applications 
within one week.  Taipei Airlines Association (TAA) Chairman 
Fan Chih-chiang confirmed that he received MAC's oral 
instructions on cross-strait negotiations on the evening of 
August 3.  He believes that although negotiation details are 
much more complicated this time, there is a good chance for 
success because authorities on both sides are willing.  Fan 
pointed out that Taiwan carriers are more interested in 
cargo flights, while China has its eye on passenger flights. 
According to Fan, Taiwan-based China Airlines suggested that 
the first stage of direct cross-strait flights be cargo 
flights between Taiwan and Shanghai, with Guangzhou and 
Beijing added later.  So far, except for MAC's oral notice, 
Fan has not received any concrete instructions on 
negotiations from the government.  Therefore, TAA has not 
taken any actions yet. 
 
¶8. Taiwan carriers support passenger charter flight service 
during holidays.  Some carriers, including FAT and 
TransAsia, are against two-day weekend charters, because on 
most Fridays/Saturdays, there would be only Taiwan-bound 
passengers, while on most Sundays/Mondays there would be 
only China-bound passengers, making flights hard to operate 
profitably. 
 
Taiwan Major Carriers Movement 
------------------------------- 
¶9. CAL and EVA, the major beneficiaries, expect that 
overflying China could save their EU/South Asia/Mid Asia- 
bound flights lots of flight time, and could therefore save 
an annual fuel cost of NTD 150 million each.  CAL will 
submit overflying-China applications to CAA on its Taipei- 
Vienna, Taipei-Hanoi and Taipei-New Delhi routes.  EVA AIR 
will take the same action. 
 
¶10. The airlines provided the following expected cost/time 
saving from overflying China: 
 
CAL            Route       Saving Time     Saving Fuel 
------      -----------    -------------- --------------- 
Passenger   Taipei-Frankfurt   one hour   USD 10,000-20,000 
            Taipei-Vienna      one hour         same 
            Taipei-New Delhi   30 min           same 
            Taipei-Hanoi       30 min           same 
Cargo       Nine EU-bound      one hour/flight 
            routes 
 
EVA              Route             Saving Time (one way) 
------          ----------------    ------------------ 
Passenger        Taipei-Paris            one hour 
                 Taipei-Vientiane        10-30 min 
                 Taipei-Hanoi            10-30 min 
Cargo            Different destinations  10-30 min/flight 
(overall fuel costs could reach NTD 0.2 billion a year) 
 
 
PAAL