Airlines
Tigerair Taiwan has three months to avoid shut down
September 15th 2016
Newly-installed China Airlines (CAL) chairman, Ho Nuan-hsuan, this week told Taiwan’s Central News Agency (CNA) that a decision concerning the fate of the carrier’s Tigerair Taiwan budget unit will be made before year-end. Read More »
Ho said CAL may be forced to withdraw its funds from Tigerair Taiwan should the LCC’s haemorrhaging continue.
Budget operators have not had it easy in Taiwan as Eleni Lung, CEO at V Air, has told Orient Aviation. “LCCs are such a new industry in Taiwan. In other countries such as Japan, there is a lot of government support, and they have specific terminals for LCCs. In Korea, they have protected route permits, but in Taiwan it is so new that the government does not really protect the LCC companies,” said Lung. In other words, Taiwanese LCCs use the same terminal at Taipei Taoyuan International Airport as their full-service counterparts, at the same cost. Budget carriers operating in Taiwan have grown from zero in 2004 to 20 this year.
V Air last month announced it would cease operations from October 1, less than two years into the business. V Air reportedly incurred aggregate losses in the first half of this year exceeding NT$900 million ($29 million), nearly half its founding paid-in capital of NT$2 billion.
Similar to its rival, CAL’s Ho now said Tigerair Taiwan has racked up losses exceeding NT$1.2 billion in the two years it has been operational.
CAL holds an 80% stake in Tigerair Taiwan, its Mandarin Airlines unit 10%, with the remainder owned by Singapore’s Tiger Airways Holdings. Ho said he did not understand why the Singaporeans, despite owning just 10% of the carrier, have a board seat with veto power.
The new CAL chairman said he would undertake a full review of all contracts as part of his tenure so that such “unreasonable” arrangements would not be made again. He also criticized that Tigerair Taiwan's organizational charter currently requires at least four of its five board members to be present to consider a decision, while all five must be in agreement for a decision to be passed.
