Thu, Dec 30, 2004 - Page 2 News List

Aeronautics agency holds talks on airfare hikes

TRAVEL COSTS The agency is discussing a maximum 10 percent increase in fares to offset higher oil prices, but it wouldn't take effect until after the Lunar New Year

By Wang Hsiao-wen and Jackie Lin  /  STAFF REPORTERS

In the face of volatile international oil prices, the Civil Aeronautics Administration (CAA) met yesterday to discuss a 10 percent fare hike for domestic flights, but no details were released as of press time.

CAA officials estimated that the fare markup, once approved, will impact passengers after the Lunar New Year, at the earliest.

Airlines proposed a 20 percent fare hike after reporting that costs had risen by NT$100 million from September. The CAA, however, demanded a further review because oil prices have edged lower recently. The CAA asked the airline operators to calculate the cost in terms of the average oil price this year. The price rise will not exceed 10 percent, CAA officials said.

"Nothing is for sure now. Even if the fare hike is approved within the CAA, the proposal still needs to be ratified by the Ministry of Transportation and Communications. Then the airlines will report their prices to the ministry," the CAA's director Billy Chang (張國政), said.

The CAA yesterday also announced a lowering of war-risk insurance fees for domestic and international flights from next year. Since shortly after the 911 terrorist attack on the US in 2001, passengers have been levied NT$70 on domestic flights and US$3 on international flights.

From Jan. 1, however, the fees will be dropped to NT$63 for domestic flights and US$2.7 for international routes. The CAA said that the war-risk insurance is a temporary measure and the price will be further adjusted as the international situation changes.

The Consumers' Foundation yesterday strongly condemned the government and air carriers' collusion to hike fares on domestic routes. It is slated to bring the case to the Control Yuan today.

"As they insist on sacrificing consumers' interests, we will ask the Control Yuan to correct the decision," the foundation's chairman, Jason Lee (李鳳翱), said at a press conference yesterday.

Sun Li-chun (孫立群), the foundation's financial chief, said the airlines' average passenger volume is 65 percent, and will surpass 75 percent during the New Year holidays. This is well above the profit threshold of 60 percent the companies reported five years ago when the current rates were fixed.

In addition, prices for crude oil are declining and personnel streamlining has increased their efficiency.

"Actually they should reduce fares as operation costs are decreasing," Sun said.

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