From a 2% to 20% share in just a decade – low cost airlines are driving the rapid growth at Taipei’s Taoyuan International airport and executives expect it to continue

The management team at Taipei’s Taiwan Taoyuan International airport expects low cost airlines to continue driving rapid passenger growth. LCCs now account for around 20% of total traffic at Taiwan’s main airport, providing leisure and (increasingly) corporate passengers a plethora of options for short haul flights within East Asia.

Taoyuan International director Chungli Yu told CAPA TV on the sidelines of the CAPA North Asia LCCs Summit in Cebu in late Jun-2019 that LCCs now account for nearly 20% of passenger traffic at Taoyuan compared to only 2% a decade ago. He said LCCs have been growing more rapidly than FSCs over the last three years and expects this trend will continue in the coming years.

“More Taiwanese can accept to travel and go aboard by LCC so we think the LCC in Taoyuan airport will keep growing,” Mr Chungli said.

Asian LCCs have been able to take advantage of Taiwan’s growing popularity as a destination. Visitor numbers to Taiwan have nearly tripled over the last 10 years, from less than 4 million in 2008 to over 11 million in 2018.

East Asia accounts for the top four source markets and around two third of total visitors to Taiwan. As these markets are all within a four-hour flight of Taiwan they are ideally suited for LCCs. After some initial resistance, Taiwanese residents have also become more accustomed to using LCCs, particularly for short haul travel. “For the Taiwanese people, for the outbound passenger the LCC is a great choice,” Mr Chungli said.

Rapid growth markets from Taiwan that are now well served by LCCs include Japan, Philippines, Thailand and Vietnam. Mr Chungli said Japan is a particularly popular destination for Taiwanese and open skies between the two countries has enabled airlines to expand in this key market.

CHART – Passenger traffic at Taoyuan International airport was up +3.7% in 2018 to 46.5 million and grew at a rate of +5.5% in 1H2019 to 28.5 millionSource: CAPA – Centre for Aviation and airport reports

Total passenger traffic at Taoyuan International has doubled over the last eight years, from 25 million in 2011 to a projected 50 million in 2019. In 2018 Taoyuan reported 12% increase in LCC traffic to 8.5 million. Taoyuan accounted for 80% of the 10.6 million LCC passengers handled by all of Taiwan’s airports last year.

There are 24 LCCs currently serving Taiwan. The only local LCC, China Airlines subsidiary Tigerair Taiwan, accounted for a 23% share of total LCC traffic in the first seven months of 2019. Foreign LCCs account for the remaining 77% led by Singapore-based Scoot with 11%.

The growth in Taiwan in recent years has not been limited to LCCs. Taiwan’s two major network airlines – China Airlines and EVA Air – have been expanding but focusing increasingly on long haul traffic and sixth freedom transit traffic. This insulates them somewhat from the intense LCC competition for short haul point to point traffic.

There is an opportunity to further increase transit traffic as it now only accounts for around 10% of Taipei’s total traffic. “We have a lot of room to improve,” Mr Chungli said.

The inbound and outbound segments are now roughly equal, each accounting for around 45% of total traffic. As both segments are expected to continue growing strongly, Taoyuan International has embarked on a major expansion plan. A third terminal is slated to open in 2025 and a third runway is under consideration for the end of next decade.

LEARN MORE… In this exclusive interview with CAPA TV filmed at the CAPA North Asia LCCs Summit in late Jun-2019, Taoyuan International airport director Chungli Yu discusses the airport’s rapid LCC development and expectations for further LCC growth.