V Air (威航), a budget airline fully owned by TransAsia Airways Corp (復興航空), yesterday announced plans to bow out of the local market to curb losses due to sharpening competition.
The carrier is to stop operations in October, allowing TransAsia Airways to better consolidate its resources and stem mounting losses.
The announcement came after TransAsia’s board of directors approved the decision.
“The move is part of the company’s long-term transformation plans to optimize resource utilization and lower operating costs,” TransAsia chairman Vincent Lin (林明昇) said in a statement following a board meeting.
Lin also pledged to prioritize improving flight safety standards and to look after the interests of affected employees.
The company’s business has taken a hit after two fatal accidents involving TransAsia aircraft in July 2014 and February last year.
After absorbing its subsidiary, TransAsia hopes to become a versatile carrier capable of distinguishing itself from low-budget competitors, company spokeswoman Amy Chen (陳逸潔) said.
“We aim to provide passengers with different options in terms of in-flight meal variety and check-in luggage allowances, as we position the company somewhere between the budget and full-service market segments,” Chen said.
The firm plans to release an updated business plan soon, she said.
V Air, which launched in December 2014, last year recorded losses of NT$450 million (US$14.31 million at the current exchange rate). Its bottom line continued to deteriorate, with aggregate losses in the first half of this year exceeding NT$900 million.
Amid intense competition, V Air burned through more than half of its founding paid-in capital of NT$2 billion, company data showed.
V Air has four aircraft, two of which were added to its fleet in January and March, and covers routes to nine destinations, including Thailand, Japan and South Korea.
TransAsia said that it would take over two V Air routes to Chiang Mai, Thailand, and Fukuoka, Japan, and pledged that affected passengers would be reimbursed.
The company added that V Air’s most popular destinations are Bangkok and Chiang Mai, with flights to the destinations operating at 77 percent capacity on average.
TransAsia reported a net loss of NT$439 million for the first quarter, easing from a net loss of NT$1.16 billion in the previous quarter.
Sales retreated significantly from NT$10.58 billion in the fourth quarter of last year to NT$3.2 billion in the first quarter of this year.
TransAsia shares yesterday gained 0.95 percent to NT$6.36, Taiwan Stock Exchange data showed.
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