Big Loser in Taiwan's Election - Cathay?

Posted by: Bruce Einhorn on March 24, 2008

The KMT is back in charge in Taiwan, after the election went off without any last-minute surprises. This being Taiwan, lots of people were on the alert for some 11th-hour funny business; for an entertaining account of some of the rumors circulating on election eve, see this blog item from FEER writer Colum Murphy.

The big loser from Taiwan’s Saturday election, other than defeated ruling-party candidate Frank Hsieh, might turn out to be Cathay Pacific. For the last 15 years or so, the Hong Kong airline and its subsidiary Dragonair have profited from the inability of Taiwanese to fly directly from Taipei to Shanghai, Beijing or anywhere else in China. With Ma Ying-jeou in the Presidential Mansion in Taipei, chances are good that we’ll finally have direct flights, sooner rather than later. That means no need to transit through Hong Kong. And no need to take Cathy or Dragon. Cathay shares were up 1.9% on Thursday, the last day of trading before the long four-day weekend in Hong Kong. Today was another public holiday – Easter Monday – so we’ll have to wait till tomorrow to see what investors think the impact of Saturday’s big KMT victory will be on the two Hong Kong airlines.

Reader Comments

Steven

March 24, 2008 8:53 AM

Why?

Cathy is still the best airline company among Hong Kong, Mainland and Taiwan. It could be a good chance for Cathy to open new direct flights between mainland and Taiwan.
If Cathy open such direct flight, Airline companies in Taiwan would have no chance due to their notorious safety records

Chinese Bangkokian

March 24, 2008 11:34 PM

Mr.Einhorn,

Are you writing the blog for a business magazine? Business is dynamic and evolving all the time. If Cathay Pacific depends so much on Taiwanese flying into the Mainland, it would have gone belly up. It doesn't need to wait for KMT's eventual victory.

Andy

March 25, 2008 1:38 AM

Hopefully there will be direct cruise too. And more importantly, taiwan can now be persuaded to participate in the building of bridge linking Mainland, HK, Macau and Taiwan.

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