The Executive Yuan reiterated Thursday that China Airlines (CAL, ??), one of Taiwan's leading international carriers will take over all domestic and overseas routes from financially troubled TransAsia Airways (????) as a temporary measure after TransAsia announced earlier this week that it is closing due to massive losses.
Executive Yuan spokesman Hsu Kuo-yung (???) said that Premier Lin Chuan (??) has instructed CAL to take over all services from TransAsia, starting from Dec. 1.
On Tuesday, TransAsia announced that it would be dissolved after incurring heavy losses amid escalating competition in the airline business. The closure news caught investors and the aviation market off-guard, as the carrier is the first listed company to seek closure as a result of financial woes.
The company had announced only a day earlier that it would stop all flights on Tuesday.
Hsu's comments came after the Ministry of Transportation and Communications (MOTC) said a day earlier that CAL would take only two domestic routes -- Taipei-Hualien and Taichung-Hualien -- which had been operated by TransAsia exclusively. The MOTC announcement showed contradictions in the government's policy for dealing with the aftermath of TransAsia's closure.
"This is an instruction from the premier and I am here to tell the press what exactly the premier said," Hsu said.
For the sake of consumers' interests, the Cabinet has asked CAL to assume all of TransAsia's routes and the takeover will be a short- term measure, Hsu said. "That's why the Executive Yuan wants CAL to start the new measure on Dec. 1," he said in a news conference.
Sources close to the Executive Yuan said that the premier's instruction was made after conducting an inter-ministerial meeting. The sources said that Lin was not happy with the MOTC's announcement.
After the short-term measure, the Executive Yuan will discuss how to deal with TransAsia's routes in the long term, and the discussions will include air right allocations and which carriers will be interested in assuming them.
As for how to redistribute air rights previously owned by TransAsia, Hsu said, the MOTC, the Civil Aeronautics Administration (CAA) and the airline business will enter negotiations.
In a statement filed by CAL a day earlier, the carrier said that it will carry out the short-term takeover measures in phases after completing an assessment of all TransAsia's routes.
CAL said that if the takeover causes losses for the carrier, the government will provide subsidies to reduce the financial burden shouldered by the company.
The CAA said that even though CAL has been asked to take over TransAsia's overseas routes for a while, the carrier will have to compete with EVA Airways (???), Taiwan's other major carrier, in future air rights distribution.
Source: Focus Taiwan News Channel