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.
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