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Government moves to aid local airlines

Taiwan's domestic and international airlines remained in the air yesterday despite their insurance coverage for acts of war or terrorist attacks being well below the usual coverage of US$1 billion or more. PHOTO: CHANG CHIA-MING, TAIPEI TIMES

The government stepped in late last night to guarantee insurance coverage to Taiwan's airlines amid anxiety in the insurance industry following the attacks on the US.

In a meeting late last night, Premier Chang Chun-hsiung (張俊雄) and legislative speaker Wang Jin-pyng (王金平) agreed to cover third-party liability war-risk losses incurred by Taiwan airlines and provide aid in covering higher premiums, according to the Central News Agency.

The relevant bills will be passed by the Cabinet tomorrow and sent on as quickly as possible to the legislature for approval, Chang said.

The move came in response to insurers worldwide yesterday imposing new regulations on maximum third-party war risk insurance coverage, severely limiting liability to only US$50 million, far short of the up to US$1.7 billion required of airlines by most international airports.

According to Alex Shih (施建華), secretary general of the Taipei Airlines Association, Taiwan's major carriers can secure US$150 million from insurers and were banking on the government to guarantee the remaining US$1.55 billion.

No details were released regarding the total extent of the coverage or how long the measure would be in place.

Airlines are concerned that with the insurance limitations airlines will be grounded due to fear of incidents for which they alone would be liable, possibly shuttering the company forever.

"We are most worried about the coverage limitation because none of our airlines would be able to bear the cost and once it [an incident] happens, it is likely to force an airline to go bankrupt,'' said another executive at the association.

The association handed its request to the Civil Aeronautics Administration on Monday and expects it to be presented to the Cabinet today. However, there is growing concern that bureaucratic red tape and legislative wrangling may stall approval for a special budget necessary to cover the liability.

"The government has been slow to understand the full implications of the situation," said Paul Wang (王振畬), spokesman for China Airlines Co (華航).

Even now that the Cabinet has decided to cover third-party losses for the airlines, the measure would still require approval from the legislature, a process which can lengthen the time it takes to get approved, Wang said.

As of press time, governments in China, Hong Kong, Thailand, Austria, South Korea, Sri Lanka the US, and the UK and New Zealand had agreed to cover liability for war and terrorism risk for their airlines to keep them in the skies.
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