U.S. airlines are choosing their pocketbooks over their principles as they bow to Chinese pressure to designate Taiwan as part of China. U.S.-based tech companies have gone along with Chinese censorship in the past so it's not a big surprise that airlines caved in. It is, however, regrettable.
U.S. airlines plan to comply with a Chinese government demand that they revise their website identifications of Taiwan to reflect China’s claim on the island territory, said a person familiar with the discussions.
The U.S. carriers affected by the mandate — American Airlines Group Inc., Delta Air Lines Inc., United Continental Holdings Inc., and Hawaiian Holdings Inc. — will begin to change the Taiwan references over the next day or two, said the person, who asked not to be named because discussions among the carriers were private.
The four airlines had been hoping for a negotiated resolution between the U.S. and Chinese governments ahead of China’s July 25 deadline. Other airlines, including Qantas Airways Ltd., Air France-KLM and Deutsche Lufthansa AG, have already cooperated with China’s wishes.
In April, the Civil Aviation Administration of China sent a letter to more than 40 foreign airlines telling them that they shouldn’t place China, Hong Kong and Taiwan on an equal footing, and must refer to “China Taiwan” or the “China Taiwan region.” Maps must display the territories in the same color as mainland China and the websites can’t place Taiwan in other categories such as Southeast Asia, the order said.
“We’re a business with significant international activities and we need to deal with regulations in all of those jurisdictions,” Peter Ingram, Hawaiian’s chief executive officer, said Tuesday by telephone. “And obviously sometimes that can put us in challenging positions in one jurisdiction versus another.”
Hawaiian consulted with its U.S. peers and government officials in both the U.S. and China before deciding to comply, Ingram said. The company doesn’t fly to Taiwan itself but does sell tickets through a codeshare relationship with China Airlines Ltd., which flies nonstop from Taipei to Honolulu. Hawaiian also operates its own service to Beijing.
American, Delta and United declined to comment. United has a flight between San Francisco and Taipei.
Reuters reported earlier that the airlines were poised to accept China’s demands.
China has waged a campaign to force global businesses to conform to its world view if they want to stay in its good graces. Democratically governed Taiwan, which Beijing considers its own, has been a central issue among the territorial disputes, especially after the Trump administration’s growing ties with the island’s pro-independence President Tsai Ing-Wen.
Airlines feared a failure to comply would result in some kind of commercial penalty from China, which would threaten the carriers’ operating conditions in the country’s fast-growing aviation market.
“In the worst-case scenario, China can play hard ball by barring the U.S. carriers from landing at Chinese airports,” Corrine Png, CEO of Crucial Perspective, an industry research firm, said in an email.
Air India Ltd. chose to rename Taiwan as Chinese Taipei on its website after the threat of a “hefty’’ penalty for non-compliance, spokesman Praveen Bhatnagar told Bloomberg News.
China’s foreign ministry didn’t respond to a fax sent Tuesday seeking comment. The Civil Aviation Administration of China, or CAAC, also didn’t respond to an email seeking comment. Last week, Hua Chunying, a foreign ministry spokeswoman, said the country’s position on the topic was “clear-cut.”
“Any foreign enterprise operating in China should abide by Chinese laws and regulations just as Chinese enterprises in foreign countries should abide by foreign laws and regulations,” she said last week. “The one-China principle is a basic fact and common sense.”
In early May, the White House had dismissed China’s directive to the airlines as “Orwellian nonsense,” adding it was part of a growing trend by the Chinese Communist Party to impose its political views on U.S. citizens and private companies.
“We would oppose a government’s demand on private corporations that private corporations label something the way that the government demands it to do that,” said Heather Nauert, a spokeswoman for the State Department. She referred questions about the airlines to the individual companies.
Last year, airlines made 7.95 million flights between China and the U.S., a 5.8 percent increase. United, Air China and China Eastern together account for more than 50 percent of the market share, followed by China Southern. Hainan Air replaced Delta as the fifth-largest carrier on this route amid its aggressive launch of direct flights from second-tier Chinese cities to the U.S.
Delta resumed its daily flight between Atlanta and Shanghai on July 20, citing its commercial links with China Eastern Airlines Corp. Delta holds about a 3.5 percent stake in China Eastern; American invested $200 million last year for a similarly sized share of China Southern Airlines Co.
“Private companies should be free to conduct their usual business operations free from political pressure of governments,’’ Australian Foreign Minister Julie Bishop said after flag carrier Qantas bowed to the demand.
–With assistance from Justin Bachman, Angus Whitley, Peter Martin, Anurag Kotoky, Mary Schlangenstein and Nick Wadhams.
©2018 Bloomberg L.P.
Photo credit: Passengers enjoy the lounge at the Taipei Songshan Airport in Taipei, Taiwan, on September 11, 2012. Several U.S. airlines have decided under pressure to refer to Taiwan as part of China. LiPo Ching / San Jose Mercury News/MCT