Look, Up In The Sky It's Taiwan's Shipping TycoonPete Engardio
Against heavy odds, Taiwan's Chang Yung-fa took one second hand ship and in two decades parlayed it into one of the world's largest cargo carriers, Evergreen Marine Corp. Now 63, billionaire Chang is at it again. This time, it's in another tough industry: the airline business.
If he does to the airlines what he did to world shipping, competitors may be in for trouble. Chang wants to pull off one of the most daring undertakings in Asian aviation: launching a major carrier from scratch. After two years of ground work, his EVA Airways is scheduled to begin service on July 1, with flights from Taipei to Bangkok and Seoul. What's more, Chang has orders and options for 28 widebodies from Boeing Co. and McDonnell Douglas Corp. worth $3.6 billion. "Nobody out here has tried starting up on such an ambitious scale," says William Burke, general manager of consulting firm Avmark Asia Ltd.
BEIJING CONNECTION? It's a gutsy move--especially in a crowded industry. But he has solid backing from Japanese banks that have financed Evergreen's ship purchases. The biggest plus is Asia's exploding demand in air travel, which is likely to continue growing at a 7% yearly clip for the rest of the decade. Taiwan is at the heart of the action: With more of its wealthy trotting the globe for business and pleasure, traffic is growing by 12% to 15% annually. Out of the 2.9 million overseas trips by Taiwanese last year, a third were to China via Hong Kong. The flow could turn to a flood if Beijing and Taipei allow direct flights to the mainland, which some analysts think could happen within five years.
The government also is rooting for EVA. State-controlled China Airlines has been unable to fly many overseas routes because of inadequate capital and Taipei's lack of formal relations with most foreign governments, which are wary of upsetting Beijing by granting landing rights. As a result, Taiwan ceded two-thirds of its lucrative overseas traffic to carriers such as United Airlines Inc. and Cathay Pacific Airways Ltd.
As a private company, EVA will have an easier time securing foreign routes. In addition to servicing booming Southeast Asian capitals such as Jakarta and Kuala Lumpur, EVA has a green light to enter Australia and Austria in September. Future destinations will include the U. S., France, Britain, and Germany.
Not that EVA is assured of a smooth ride. Some routes already suffer from overcapacity and low fares. And regional heavyweights such as Cathay Pacific and Singapore Airlines Ltd., the world's two most profitable carriers, are beefing up their fleets as well.
With Evergreen now boasting annual sales of more than $1 billion, Chang has won respect despite his reputation as an eccentric tycoon. A vegetarian, he urges managers to join a religion known as the Duck Egg sect, whose adherents once relied on eggs for protein. He also believes in discipline: Being 15 minutes late counts as a day off--and most employees work well into the night. By running such a tight ship, Chang should also be able to make it in the skies.