Business: CAT in a Corner

When the Flying Tigers’ boss, General Claire Chennault, domesticated some war-weary military transports and U.S. fighter pilots following World War II, hardly anyone expected the ragtag operation to last for long. In fact, his CAT (for Civil Air Transport) blossomed into one of the best-run airlines in all of Asia, flying out of Taipei around the Communist perimeter from Seoul to Bangkok. But now, CAT’s string seems to have run out.

Last week CAT announced that it was suspending all international passenger flights after the airline’s only jet, a leased Boeing 727, nosed into a tea plantation near Taipei, killing 21 of the 63 persons aboard (among the survivors: CAT’s Chief Pilot Stuart E. Dew, 46, who served as General George Marshall’s personal pilot during his China mission in 1946). Though the suspension was said to be temporary, everyone’s best guess was that it probably meant CAT’s death.

Moonlit Pilots. By any reckoning, CAT has had more than one life. Caught in China’s civil war, Chennault’s outfit snarled Communist timetables of conquest by ferrying soldiers and supplies to the mainland. In the process, CAT became Nationalist China’s civilian transport arm and the most shot-at airline in history. When Generalissimo Chiang Kai-shek retreated to Taiwan, CAT went along. From time to time, its crackerjack pilots moonlighted, accepting such missions as dropping French paratroopers into Dienbienphu in 1954.

Over the years, CAT slipped behind Taiwan’s fast-moving economy, and its backers seemed to lose interest. Though 60% of CAT is owned by Chinese investors, the remaining share is held by Pacific Corp., a Delaware-registered holding company that also owns Air Asia and Air America, both booming and active these days in supporting U.S. military efforts in Southeast Asia. U.S. personnel have dominated CAT’s front office as well as its cockpits.

Chipping Away. Subtly playing on national sensibilities, with none other than Chiang Kai-shek’s son and heir apparent Chiang Ching-kuo pulling the strings, government-backed all-Chinese China Airlines (CAL) started chipping away at CAT’s route map last April. First CAL began flying parallel flights from Taipei to Hong Kong and Tokyo, then took over CAT’s routes to Seoul and Manila. It bought three Boeing 727 jets with government guaranteed loans and, recently, a former Taiwan air force chief, who is also a close associate of Chiang Ching-kuo’s, appeared as CAL’s No. 1 man. Clearly, Taiwan wanted an airline that could be controlled at home and manned by an ample reservoir of retired air force personnel.