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China Airlines in line with regulations: CAA

China Airlines Ltd (CAL, 中華航空), the nation’s largest air carrier, did not violate any screening requirements in its recent airplane purchase, a top aviation official said yesterday.

The statement came the day after Chinese Nationalist Party (KMT) legislators questioned whether CAL had signed a deal with European aircraft manufacturer Airbus SAS to buy 20 A350-900 aircraft for more than NT$130 billion (US$4.3 billion) before obtaining official approval to do so.

Billy Chang (張國政), head of the Civil Aeronautics Administration (CAA), said at a press conference that the proposal had been properly processed.

Chang said that in December CAL submitted the procurement plan to the CAA detailing the carrier’s intention to place an order for 14 of the 20 new aircraft and to phase out the six A340-300 passenger jets it was operating. The plan also contained an option to buy an additional six new Airbus aircraft.

The CAL plan also explained the method of payment, source of funds and the firm’s financial forecast, Chang said.

Before approving the plan, the CAA was also apprised of how CAL would maintain the planes and whether the use of the new aircraft would be in line with Taiwan Taoyuan International Airport regulations, he said.

Chang said that on Jan. 21, a vice president of CAL told the CAA that the deal was an emergency, which prompted the CAA to step up the screening process and to approve the plan the following day.

Chang did not elaborate on the nature of the emergency. CAL signed the contract with Airbus the same day it received approval from the CAA, he said.

In response to speculation that the deal had cost CAL an extra NT$10 billion and an excessive 3 percent licensing fee, Chang said local airlines were not required to include the price and the licensing fee in any aircraft procurement proposals submitted to the CAA.

Such amounts were regarded as commercial secrets and were therefore not subject to CAA screening, he said.

CAL spokesman Bruce Chen (陳鵬宇) yesterday rejected the allegations of the KMT legislators as “groundless.”

There was no wrongdoing and the company welcomed an investigation, Chen said.

“If there’s any slander, we may take necessary legal action,” he said.

Chen Yun-nan (陳雲南), head of an investigative unit from the Supreme Prosecutors’ Office, said on Wednesday that prosecutors had launched a probe into suspected influence peddling and kickbacks involving certain government agencies and companies in the deal.

Toulouse, France-based Airbus, the world’s largest commercial aircraft maker, said on Dec. 11 it won a commitment from CAL to acquire 14 A350-900 planes.
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