The airline industry was perhaps the sector hit hardest by the Sept. 11 terrorist attacks in the United States, and China Airlines has not been immune to the impact.

Christine Tsung, president and CEO of Taiwan's national carrier, said the airline braced for tough times, scaling down operations and stepping up safety measures.

She says it was imperative for the airline to cut down capacity immediately following the attacks. "If you don't cut down your capacity on the first day, you can't win," Tsung said in an interview with The Japan Times.

Nonetheless, China Airlines has seen a decline in customers, rising insurance payments and increasing costs related to security.

Compounding the airline's woes was a deadly typhoon that struck Taiwan shortly after the attacks, and as a result, the carrier was forced to revise its 2001 earnings forecast to 1.37 billion Taiwanese dollars (4.9 billion yen) in pretax profits, down a whopping 58 percent from an earlier estimate.

The carrier cut total passenger capacity by 12 percent for services between Taiwan and the U.S. in October, Tsung said.

It also revived the system of so-called air marshals, security personnel who travel on all flights between Taiwan and the U.S., as part of efforts to ease passenger fears over terrorism. The carrier has 147 air marshals at present, Tsung said.

"People are losing confidence in traveling. But I think that (their concern) is exaggerated. . . . We should not be intimidated by (terrorists)," Tsung said.

Here in Japan, Tsung says the airline is preparing for big changes with the April opening of a new runway at Narita airport in Chiba Prefecture.

China Airlines is one of only two foreign carriers that operate from Haneda airport in Tokyo's Ota Ward. But after the new runway opens at Narita, all regular international services at Haneda will be moved to Narita. Accordingly, the Taiwanese carrier must transfer all operations to Narita.

Last year, seats on the carrier's Tokyo-Taipei route flights were filled to an average of 90.7 percent capacity, as business exchanges between Japan and Taiwan expanded in the information technology sector and over Taiwan's bullet train project.

Tsung argues the transfer to Narita will give the airline access to tourists in the northern Kanto region and an opportunity to boost its cargo business.

"It is a chance to get into a new market. As far as customers (are concerned), we will be able to offer better services," Tsung said. She also believes the airline's cargo-handling operations should become more efficient at Narita because facilities and transportation networks for international cargo services are concentrated around the airport.

Tsung also believes the carrier's operational costs will be lower at Narita, including hotel costs for crew.

In July 2000, Tsung became the first woman to take the helm of China Airlines. She has since introduced a series of reforms, ranging from pursuing operational efficiency to increasing safety measures and motivating employees.

For example, at the very first board meeting of the carrier after becoming president, Tsung proposed reviewing the carrier's aircraft purchase plans.

"If you have a wrong plane for a wrong route, you could still lose money even with a 100 percent load factor. . . . We had a huge purchase plan. (My proposal) was to make sure that we didn't buy more than we needed," Tsung said. As a result, the airline changed its plan and selected more fuel-efficient planes and those with flexible seating arrangements.

Tsung also took on the airline's management. She streamlined management layers and adopted performance-based evaluation of employees, instead of bureaucratic and seniority-based systems. Under the changes, employees can e-mail opinions, complaints and any other messages directly to Tsung.

"If you make money, it's your money. You will be rewarded for what you have done. . . . Instead of giving orders, I give authority (to employees) so that they have room to improve," Tsung said.