Taiwan's major airlines may be forced to layoff employees and slash salaries as they struggle to manage the financial fallout from the terrorist attacks on the US two weeks ago, according to industry executives.
Airlines around the world are cutting tens of thousands of employees due to plummeting passenger numbers, which will be compounded by higher costs of third-party war risk liability spirals due to high anxiety in the insurance industry.
Some say Taiwan's airlines might soon follow suit.
"We're worried that airlines may start contracting out certain areas of operations to save on employee benefits, forcing layoffs," said Chang Kuo-shu (張國書), secretary-general of the ROC United National Airline Union (中華航業工會全國聯合會).
Chang, whose organization represents around 20,000 workers in the airlines industry, said that although there has been no indication as yet of such a move in the short term, it couldn't be ruled as an option before the year is out.
"With poor results in the first half of the year and now the attacks on the US, things don't look good," said Chang, who admitted that pay cuts were a more likely option for Taiwan carriers in the short term.
According to industry journal Aviation Daily, US' Delta airlines announced plans to slash 13,000 jobs by year-end, freeze wage increases and ax 10 international routes on what company executives described as demand for air travel dropping precipitously since Sept. 11.
Delta joins other major carriers around the world in axing jobs including American Airlines which plans to ax 20,000 workers, Air Canada said it was cutting 5,000 jobs with total layoffs in the US amounting to 91,790 according to the journal.
Closer to home, South Korea's Asiana Airlines is reportedly going to slash 360 jobs and United Airlines is laying off 400 flight attendants in Singapore and Thailand.
Even before the attacks, the financial pressure on the airline industry was already building with the number of business passengers in the US dropping sharply in the first half of the year, according to the Pennsylvania-based Business Travel Coalition.
In the wake of the attacks, the Coalition predicts that business travel by January next year will drop by 50 percent year-on-year.
"The airline industry will undergo a gut wrenching restructuring as it moves toward a new economic model," said Kevin Mitchell, Business Travel Coalition chairman.
"Our No. 1 priority must now be to restore confidence in the traveling public and rebuild business-travel levels as quickly as possible," he said.
Executives at Taiwan's top international air carriers, China Airlines (華航) and EVA Airways (長榮), said they were still evaluating the impact on their companies and did not rule out the possibility of slashing jobs.
"We cannot escape the disaster," said Paul Wang (王振畬), spokesman for China Airlines, which derives 30 percent of its revenue from US routes.
"As people are now more hesitant to travel -- passenger numbers have dropped," Wang said, adding that the company was still evaluating its response to tougher times.
An executive at EVA said that the company earlier this year had begun a program of reducing its workforce and that this task would continue, but declined to say whether the streamlining would be expanded due to the attacks.
EVA had already been struggling prior to the attacks, recording a first-half loss and predicting a loss for the year.
China Airlines on the other hand had notched up profits in the first half, but the company will not likely meet profit forecasts for the year, Wang said.
Analysts said layoffs in Korea and Thailand and reports of potential staff cuts at airlines in Singapore and Hong Kong may be a precursor to further staff cuts across the entire region.
"Even the more defensive airlines such as Cathay and Singapore have forewarned of such a possibility," said Andrew Tan, a regional airline analyst for ABN Amro in Singapore.
"Taiwan airlines have some disadvantages, such as relying on US traffic, and they're more leveraged, more in debt, meaning the pressure to layoff is higher," Tan said.
Besides declining passenger volumes, airlines are faced with spiralling expenses after insurers annulled coverage for any losses over US$50 million due to war or terrorism.
Airlines worldwide have been scrambling to find coverage up to the around US$1 billion to US$2 billion required by most aviation authorities before flights are allowed to land.
While the governments are coming to the rescue in most countries -- including Taiwan where the Legislature yesterday approved the 30-day, US$1.7 billion third-party war risk liability for the nation's airlines -- finding private coverage is still essential.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last