STARLUX Airlines Struggles to Take Flight

The pandemic has grounded Taiwan’s new carrier for the time being, but its long-term prospects still look promising

STARLUX Airlines had the misfortune of launching its business amid the worst pandemic in a century. The new Taiwanese carrier began flying on January 23, the first day of the 2020 Lunar New Year holiday and the same day China locked down the city of Wuhan in a belated effort to stymie the spread of the coronavirus. The first flights were to Macau; Penang, Malaysia; and Da Nang, Vietnam.

Within less than two weeks, STARLUX had suspended all passenger flights to Macau. In March, it stopped flying passengers to Penang and Da Nang. For now, the Taoyuan-based airline is focusing instead on cargo flights, where it sees strong demand. The cargo flights allow pilots to gain more flying hours, a company spokesperson told local media, an advantage when STARLUX later applies to Taiwan’s Civil Aeronautics Administration (CAA) to launch new flights. 

In July, STARLUX announced it would recruit Republic of China Air Force veterans to join the airline as commercial pilots. That move made it one of the only airlines in the world adding to its workforce during the pandemic. Before 2024, STARLUX plans to have a fleet of 27 planes and 3,500 employees.

The founder and chairman of STARLUX is Chang Kuo-wei, a former chairman of EVA Airways, part of the Evergreen Group. After the death in 2016 of his father, Chang Yung-fa, the patriarch of the group, Chang Kuo-wei lost control of EVA to his elder half-brothers, who held more shares in the company. He then decided to start his own airline in competition.

The International Air Transport Association (IATA) estimates that global passenger volume in 2020 will fall 55% year-on-year and not recover to pre-pandemic levels until 2024. “Passenger traffic hit bottom in April, but the strength of the upturn has been very weak,” Alexandre de Juniac, IATA’s director general and chief executive officer, said in a July statement. With the virus still spreading rapidly in many parts of the world, the IATA expects “a longer recovery period and more pain for the industry and the global economy.” 

Industry observers say that STARLUX’s fundamentals remain strong despite the dismal short-term outlook for the airline sector. “It’s very exciting that Taiwan has a new airline offering a high-quality product,” says Andrea Wu, principal at Agility Strategic Consulting and former general manager of United Airlines Taiwan. She notes that STARLUX’s fleet consists entirely of brand-new planes.

In a January press release, STARLUX highlighted what it says is a generous 31 inches of leg room in economy class, as well as uniquely textured cabin seats, boarding music composed especially for the airline by jazz musician Peter White, and an in-flight meal designed by Michelin star chef Lam Ming Kin.

“STARLUX is targeting customers who are willing to pay a premium price,” says Wu. “They may raise standards in Taiwan’s airline industry.”

She says she expects that the pandemic will cause STARLUX to revise its initial planning. The airline had aimed to start flying long haul to North America by 2022.

Instead, STARLUX will likely focus on the regional market for a longer period, but that brings obstacles of its own. “I think the challenge for STARLUX is in reaching the necessary scale in a regional market that has been devastated by COVID-19 in the last six months,” says John Grant, owner of London-based JG Aviation Consultants. “Consumer confidence has been shattered, and then overlaying that with perhaps electing to fly with a new rather than established airline may be considered as a risk too far for some travelers.”

Unlike its competitors EVA Airways and China Airlines, STARLUX does not have established domestic routes it can use to generate revenue while international travel is at a standstill. In June, EVA’s domestic subsidiary Uni Air announced it would add flights to the outlying islands of Penghu and Matsu to meet strong demand. Between late May and August, this writer flew round-trip between Taipei and Penghu once and Matsu twice on Uni Air. Five of the six flights were sold out.

In August, STARLUX launched a “pretending to go abroad” flight to Taiwan’s Pratas Islands in the South China Sea. Chairman Chang, a veteran pilot, flew the plane himself. The airline said the plane flew at a lower altitude than usual to allow passengers to enjoy the view.

The 188 seats for the charter flight reportedly sold out in just 30 seconds. Most passengers were reportedly aged 20 to 40 and eager to break out of the doldrums of their daily routine amid the pandemic. “What it perhaps shows more than anything is the huge pent-up demand that people have to fly,” Grant says. “In the right conditions, markets such as Taiwan will see a significant spurt in demand, but everyone is waiting for the time to be right.”