Analysis | Rebranding is beneficial to China Airlines. Here’s why

TAIPEI (The China Post) — Taiwan’s Legislative Yuan voted on Wednesday to work towards renaming China Airlines, one of the national air carriers.

Such a proposal immediately prompted various questions: Would doing so be prohibitively expensive? Would the airline lose aviation rights as a result of the act?

The airline industry is unimaginably complex, so there is no definite answer to such a nuanced topic. While the issue of renaming Taiwan’s national airline is inherently controversial, let us move away from political polarization and analyze what is best for China Airlines, from a business perspective.

The Cost of Rebranding

Firstly, if China Airlines were to rebrand itself to reflect a more Taiwanese identity, it is undeniable that the airline would incur costs.

This is because airlines logos appear everywhere: from check-in counters, lounges, to even the napkins passengers use onboard. So yes, it would be a significant investment for China Airlines to repaint their planes to rebrand across their network.

However, an airline’s profitability is as much determined by revenue than it is affected by costs. In the long term, if an airline is able to attract more customers than now, such rebranding efforts would pay off.

Rebranding China Airlines could address previous issues. For example, many people in English-speaking countries believe the word “China” has negative connotations, and they don’t associate the airline with Taiwan when they hear about “China” Airlines.

In addition, China Airlines is often confused with Air China, which is owned by the Chinese government. In recent years, safety and service incidents associated with Air China have damaged the Taiwanese airline’s reputation, as the majority of the world simply cannot tell the two carriers apart, largely due to the confusing naming.

On the other hand, CAL’s main competitor, EVA Air, is well known as a Taiwanese company offering high standards of flight safety and service. If China Airlines can change a name that has made marketing difficult in the past, the benefits of rebranding could outweigh the potential costs.

Aviation Rights

The second area of concern from China Airlines’ perspective would be aviation rights, which grants airlines the privilege to enter, fly over, or land in another country’s airspace.

Such rights, critical to any airline’s operations, are as a result of decades of negotiations between airline companies and regulatory agencies. Some have indicated the possibility of China Airlines losing these rights because of a name change, but it is important to understand that rebranding does not have to include changing the legal name.

For instance, the major European airline based in Amsterdam is branded as KLM Royal Dutch Airlines, but the three letters KLM stand for its registered legal name, Koninklijke Luchtvaart Maatschappij.

In a similar fashion, China Airlines could perhaps rebrand as “CAL Formosa Airlines,” while retaining its formal name, to avoid compromising its aviation rights.

Political Considerations

Finally, while airlines tend to stay out of politics, companies such as China Airlines also have to consider its ability to continue flying into existing markets, particularly China.

Critics of the idea to rename China Airlines have voiced concerns about angering the Communist Party in Beijing, and have speculated that the Chinese government would ban CAL from flying into Chinese airspace.

While such a situation would indeed be unfavorable, and the possibility of occurrence cannot be ruled out, CAL could minimize risk by choosing a more politically neutral name.

For example, by utilizing words such as “Formosa” or “Taipei”, the airline could stay out of the Taiwan-China debate and continue serving its existing passengers with minimal controversy.

At the end of the day, even without changing China Airlines’ name to “Taiwan Airlines”, the company can respond to the voices of the people by removing “China” from its name and avoid confusion and controversy altogether.