U.S. Airlines to Accept Chinese Demand on Naming Taiwan

(Bloomberg) -- 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.

Carriers’ Compliance

American Air said the airline is making the changes.

“Like other carriers, American is implementing changes to address China’s request,” the carrier said in an emailed response to Bloomberg News. “Air travel is global business, and we abide by the rules in countries where we operate.”

The Civil Aviation Administration of China, or CAAC, said Wednesday it didn’t have an immediate comment on the plans of U.S. carriers. China recognizes some positive developments and corrections by foreign airlines, Foreign Ministry spokesman Geng Shuang said at a regularly scheduled briefing, responding to a question on whether China was satisfied with changes made by American and Delta.

“China stands ready to share development opportunities with foreign enterprises. We welcome their investment and hope they can start up their businesses here,” Geng said Wednesday. “At the same time we hope they can abide by China’s rules and regulations, our sovereign integrity and our people’s feelings.”

A search for Taipei under flight bookings on the websites of Delta and American shows the city’s name without any country name or code after that. Searches of other destinations, including London and Tokyo, show up with the country’s name following the name of the city.

‘Challenging Positions’

“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.

Delta and United declined to comment. United has a flight between San Francisco and Taipei.

Geopolitical Sensitivities

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 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.

China and Taiwan have been ruled separately since Chiang Kai-shek’s Nationalist government fled to Taipei in 1949, and the Communist Party regards the island as a province to be taken by force if necessary.

Hong Kong and Macau -- also requested by the aviation authority to be referred to as Chinese territories -- are special administrative regions that enjoy greater autonomy.

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.

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.

‘Orwellian Nonsense’

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 Angus Whitley, Peter Martin, Anurag Kotoky, Mary Schlangenstein and Nick Wadhams.

To contact Bloomberg News staff for this story: Dong Lyu in Beijing at dlyu3@bloomberg.net;Justin Bachman in Dallas at jbachman2@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, ;Anand Krishnamoorthy at anandk@bloomberg.net, Susan Warren

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With assistance from Editorial Board