China Southern Flight Lands in Taipei, Ending Tourist Ban

By Eugene Tang and Tim Culpan

July 4 (Bloomberg) -- Liu Shaoyong, chairman of China Southern Airlines Co., piloted a Chinese tourist flight to Taiwan, ending a six-decade ban that deprived the island of visitors from its closest neighbor.

Passengers applauded when the Airbus SAS A330 landed in Taipei at 8:05 a.m. after the 95-minute flight from China's southern Guangzhou Baiyun airport. Liu, 49, took the controls for take-off and landing, underscoring the trip's significance to the nation and its largest airline.

China and Taiwan agreed in June to start direct flights for tourists for the first time, signaling a rapprochement between governments estranged since their civil war ended in 1949. Allowing visitors from the world's most populous nation may boost Taiwan's economy, forecast to grow at less than half the pace of its larger neighbor this year.

``This was a small step across the strait but a giant stride for relations between China and Taiwan,'' said Liu, a trained commercial pilot and former vice minister of the Civil Aviation Administration of China. ``Taiwan and China has been one family, but we'd been split by history, so it feels great to come home.''

The flight, greeted by a traditional Chinese ``lion dance'' and sprays of water from fire trucks, followed the March election in Taiwan of President Ma Ying-jeou on a pledge to improve ties. Predecessor Chen Shui-bian had kept travel and trade restrictions to limit China's sway over the island that it claims as its own and vows to take by force if necessary.

Ambition for Generations

``For generations, mainland residents have wanted to visit Taiwan because we've read so much and heard so much about the island,'' said Zhang Yu, a Shenzhen resident on the flight to Taipei.

Taipei-based China Airlines took off this morning for Shanghai, the first weekly flight for tour groups by a Taiwan carrier to the mainland. Six China-based airlines and five from Taiwan will make 36 round trips each week, operating Friday through Monday.

``This non-stop flight saves me a lot of time because normally I would travel from early morning for a whole day,'' said Michael Yin, a passenger.

Direct flights shave as much as six hours off the journey across the 100-mile (161-kilometer) Taiwan Strait. Until now, the estimated 1 million Taiwanese living in China have changed planes in Hong Kong or Macau.

Chinese airlines will transport 662 tourists to Taiwan today and 3,000 in the first week, Taiwan's Minister of Transportation and Communications Mao Chi-kuo said yesterday.

Red-Carpet Welcome

Taiwan's rolling out the red carpet. The tourism board is hosting a reception tonight at the Taipei Grand Hotel, where Nationalist leader Chiang Kai-shek and his wife Madam Chiang once held state banquets.

``The charter flights and new tourism arrangements are very important for us,'' said Anthony Liao, president of Phoenix Tours International Inc., Taiwan's third-largest travel operator. ``At 10,000 mainland tourists per year, I can almost double my profits.''

Taiwan's tourism literature will add simplified Chinese script used on the mainland, while tour guides have been tutored on mainland idioms, according to a June 30 report by the Taipei- based United Daily News.

Taiwan companies have pressed their government for closer ties to benefit from the expansion of the world's fastest-growing major economy. The island's businessmen have invested as much as $100 billion in China since 1990, CLSA Ltd. estimates.

China's Growth

China's economic output of $3.6 trillion last year was more than nine times Taiwan's and the mainland's 9.8 percent expansion in 2008 will outpace the island's 4.3 percent growth, the World Bank forecasts.

``Taiwan's economy and consumption should indirectly benefit in the long run,'' said Nick Lai, a Taipei-based analyst at JPMorgan Chase & Co. ``A more open economic policy and a better relationship with China will help boost domestic consumption.''

Spending by Chinese tourists overseas rose 11.8 percent to $24.3 billion in 2006, the fastest-growing of the top 10 nations apart from South Korea, according to the World Tourism Organization.

A measure of Taiwan tourism stocks has risen 44 percent this year, the best performer of 28 industry groups in Taiwan's TWSE Index, which has declined 13 percent, signaling investors' expectations that improved ties will translate into profits.

Besides China Southern, Air China Ltd., China Eastern Airlines Corp., Xiamen Airlines Co., Hainan Airlines Co. and Shanghai Airlines Co. will operate weekly nonstop flights. The Taiwan carriers include EVA Airways Corp., Mandarin Airlines, Uni Airways Corp. and TransAsia Airways Corp.

Shortest Flight

China Southern beat Air China to fly the first service because the flying distance from its Guangzhou base was the shortest of Chinese cities, Liu said. Flights from Guangzhou needed only a 12-minute detour into Hong Kong air space, versus more than an hour from Shanghai or Beijing, Liu said.

``We hope to eventually see direct flights that do away with the detour, which is a waste of time and fuel for the airlines concerned,'' Liu said. ``It doesn't bode well at a time when we're supposed to be cutting emissions and saving fuel.''

Phoenix Tours' Liao estimates the Taipei-based company will bring 5,000 Chinese tourists to Taiwan in the second half and predicts it will handle 20,000 annually by 2010. The company's stock has climbed 51 percent this year.

To contact the reporter on this story: Eugene Tang in Beijing on eugenetang@bloomberg.net