China Airlines (CAL)'s new chairman and CEO, Hsing-Huang Kao, tackles the challenges posed by U.S. tariffs to secure Taiwan's top position in the air cargo industry.

By the end of March 2025, China Airlines' newly appointed chairman, Kao Hsing-huang, faced the challenge of the increased import tariffs imposed by U.S. President Trump. He quickly adjusted the airline's network and cargo strategy, shifting cargo routes from China to Southeast Asia, maintaining China Airlines' leadership as Taiwan's top air cargo carrier. Kao Hsing-huang's crisis management skills are rooted in his experience during the pandemic, when he successfully led China Airlines to profitability against the odds. In 2024, China Airlines reported a record profit of 14.3 billion NTD and continued its investments in fleet upgrades and sustainable fuels, demonstrating both resilience and adaptability.

Breaking Through Adversity During the Pandemic: China Airlines' 2024 Profit Reaches NT$143 Billion

Gao Xinghuang is no stranger to taking charge in times of crisis. In 2021, he became the general manager at the height of the COVID-19 pandemic, when the global aviation industry was in a deep freeze, with 99% of companies losing money and over 40 airlines going bankrupt. Gao led China Airlines in a counter-cyclical operation, converting idle passenger planes into cargo charters, successfully capturing the cargo market and achieving a profit of NT$93.8 billion that year, the second-highest in history.

This experience laid the foundation for China Airlines' post-pandemic recovery. In 2024, with a global surge in pent-up travel demand, both passenger and cargo operations boomed, resulting in an annual profit of NT$143 billion, with revenue, profit, and earnings per share all reaching record highs. Gao emphasized that this achievement stemmed from a corporate culture of not laying off employees and sharing both the hardships and successes with them, as well as a long-term strategy of expanding the global flight network.

Tariff Tsunami Strikes: Cargo Dispatch Demonstrates Agility

However, on April 3, 2025, the Trump administration announced an increase in tariffs on imports to the United States, causing a severe impact on the global supply chain. As the airline with the largest cargo fleet among national carriers, China Airlines, with cargo revenue accounting for 36%, was hit first. Gao noted that customers began canceling their scheduled charters to the U.S., but just 48 hours later, Trump announced a 90-day grace period extension, prompting customers to reorder, leaving the China Airlines team scrambling.

In response to this policy shock, Gao quickly initiated a restructuring of the flight network. The cargo routes, originally focused on China, shifted to collecting goods in Southeast Asia for transshipment to Europe and the U.S. China Airlines immediately dispatched 747-400 freighters to Vietnam, Singapore, and the Philippines to collect goods, which were then consolidated in Taiwan before being flown to Europe, the U.S., and Japan, successfully securing urgent orders and stabilizing cargo revenue. According to data, China Airlines' cargo revenue in March reached NT$58.97 billion, a monthly increase of 30.44% and an annual increase of 27.5%, setting a new high for the year.

Addressing Aircraft Shortages and Cost Pressures: Continued Investment in Fleet Upgrades

In addition to tariff challenges, the aviation industry also faces bottlenecks in the aircraft supply chain. Gao pointed out that about half of China Airlines' fleet comes from Boeing in the U.S., and due to manufacturing and delivery delays, the cost of purchasing and maintaining aircraft has risen. To sustain capacity and remain competitive in the market, China Airlines continues to lease aircraft and actively replaces old ones, planning to complete the delivery of 28 A321neo aircraft by 2027 and has announced the purchase of 10 A350-1000, 10 777-9, and 4 777-8F freighters, with deliveries starting in 2029.

Additionally, China Airlines has signed a memorandum of cooperation with Formosa Petrochemical to purchase over 10,000 tons of sustainable aviation fuel (SAF) over the next three years, demonstrating its commitment to environmental protection and sustainable operations.

Steady Management Philosophy Amid Geopolitical and Market Changes

Gao emphasized that the aviation industry is at the intersection of global economic and political changes, facing endless challenges from aircraft shortages, tariffs, to geopolitical risks. He uses "making sense of chaos" as his motto, stressing the importance of steady management and agile adjustments. Regarding U.S. tariff policies, he noted, "The first wave of the tsunami hits businesses, the second wave hits sea and air transport, and the third wave hits consumers. As long as the routes are adjusted appropriately, long-term transportation demand will persist."

In terms of travel, although tariffs and U.S. immigration policies may affect demand for travel to the U.S., Gao stated that China Airlines will continue to monitor market dynamics and flexibly adjust flight schedules and pricing strategies. He also acknowledged that rising import costs of aircraft components might increase ticket prices, but ultimately, it is determined by market supply and demand.

Leading China Airlines Forward with a Philosophy of Flight

Gao's leadership style is deeply influenced by his background in aviation. During the pandemic, he served as general manager while continuing to fly missions, sharing both the hardships and successes with employees. He stated, "I might serve as chairman for 2 or 3 years and then step down, but the next chairman must continue to lead the company forward." He does not seek personal glory but is committed to building a stable and sustainable China Airlines.

Amid ongoing uncertainties in the global aviation industry, under Gao's leadership, China Airlines has demonstrated strong resilience and adaptability through flexible cargo dispatch, continuous fleet investment, and steady management strategies, maintaining its position as the leader in Taiwan's air cargo industry.

References

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