Palau’s ties with Taiwan leads to airline shutdown

The Palau Pacific Airways has been forced to halt its flights due to China’s declaration of Palau as an “illegal tour destination,” in an attempt to punish the Pacific nation for its diplomatic relations with Taiwan.

“We have tried everything we can to advertise and promote Palau in China’s tourism market. We spent more than USD$1 million on promoting Palau annually,” Sea Passion Group, which owns the airline, said in a statement.

The Koror-based Palau Pacific Airways launched scheduled charter flights between Hong Kong on Nov. 7, 2014 , with a plan to operate five-times-a-week charter services to Hong Kong Chek Lap Kok Airport. The carrier has wet-leased a Boeing 737-800 aircraft on an annual contract from Slovakian Aircraft, Crew, Maintenance and Insurance operator.

The airline said its average round-trip ticket cost $800 (HK6,280) and it carried a total of 30,000 passengers in 2015. Now, the average cost of its ticket plummeted to $300 and its traffic went down to 14,000 passengers since the start of the year.

“The Chinese government made Palau an illegal tour destination possibly and most likely due to lack of diplomatic status,” the airline. “All the tour agencies in China having a Palau tour product will be considered illegal and will be fined.”

China does not recognize any nation that has diplomatic ties with Taiwan – officially known as the Republic of China— which has been self-ruled since its secession from the mainland after the civil war in 1949.

“In October 2017, the Chinese government banned the use of the word ‘Palau’ in all sales materials on all online and offline sales and marketing. In more recent developments it has also become illegal to sell tour packages for Chinese tourists to visit Palau,” the airline said.