Loss-making routes handed to Mandarin

Mandarin Airlines (華信航空) will replace UNI Airways (立榮航空) in plying the loss-making routes to outlying Orchid and Green islands off the east coast, and will receive full compensation from the government for its trouble.

The Civil Aeronautics Administration yesterday confirmed that UNI, a wholly-owned subsidiary of the Evergreen Group (長榮集團), had requested halting its service to the islands, as it wanted to cut its losses and streamline its fleet.

Starting Oct. 1, Mandarin, which is 90-percent owned by China Airlines Co (中華航空), will fly five times per day from Taitung to Orchid Island and six times per day to Green Island.

The service will extend Mandarin's coverage of Taiwan's outlying islands as the company also serves the tiny communities on Chimei and Wangan islets, which are both part of the Penghu or Pescadore Archipelago, with populations of under 2,000 each.

A spokeswoman for Mandarin said that the government would compensate the airline for servicing the loss-making routes to the tune of NT$120 million every year.

Amy Ling (凌鳳儀), director of the CAA's air transport department, told the Taipei Times that no fixed figure had been decided on, but that the Ministry of Transportation and Communications would compensate all losses for the airline at the end of the fiscal year.

Ling said that the compensation originally offered was one-third of the losses and that despite the the new compensation package, UNI still wasn't interested.

A local newspaper yesterday quoted Mandarin president Mike Lo (樂大信) as saying that as long as the government was prepared to fully compensate his airline for flying the routes, there was no reason to refuse.

An additional reason got the change could be simply that Mandarin's parent company, China Airlines, is for all intents and purposes a state-run enterprise with a government-appointed board holding a 71 percent stake in the carrier.

Mandarin is currently negotiating with UNI for the lease to its two Dornier 228 planes that are currently used to service the route. A spokeswoman said that the company was still deciding whether the rental package would include the flight crew or if Mandarin would train its own to fly the aircraft.

UNI president Cheng Kuang-yuan (鄭光遠) was also quoted by the paper as saying that UNI's decision to pull out of the routes had nothing to do with his company's exclusion from additional routes between Hong Kong and Taiwan.

Just over a week ago negotiators from Taiwan and Hong Kong allocated 16 weekly flights between the two sides to Mandarin, despite the fact that the extra flights were only on offer because its parent company had lost its right to claim them after the May 25 crash of one of its aircraft into the Taiwan Strait, killing all aboard.

Cheng said that the firm was incurring losses of between NT$7 million to NT$8 million annually and that the red ink was becoming increasingly difficult to accept.