The Ministry of Transportation and Communications (MOTC) said yesterday that it is considering cutting or reducing its subsidies to domestic airlines with flights to outlaying islands.
The announcement came followed a move by four domestic airliners to offer discounts of approximately 50 percent on Taipei-Kinmen flights for Kinmen County residents.
TransAsia Airways, for example, announced earlier this month that Kinmen residents were eligible for a 50 percent discount on Taipei-Kinmen flights until next month.
Far Eastern Air Transport and Mandarin Airlines, quickly followed suit, offering Kinmen residents 45 percent and 47 percent discounts respectively.
Uni Air offered a 50 percent discount, but decided to cancel the offer three days later.
CCA WEIGHS IN
Civil Aeronautics Administration Director-General Billy Chang (
By law, the government must subsidize domestic airliners by helping pay 20 percent of ticket prices for residents of Kinmen, Matsu, Taitung and Lanyu (
Chang said his agency has recognized that the price-cutting strategies will be "a problem."
"If the domestic airlines could cut prices by 50 percent and still survive, then one has to ask whether the subsidies should continue," he said.
Chang said that his agency would have to amend its regulations if it decides to cancel or cut the subsidies.
The CAA said it has budgeted approximately NT$289 million (US$8.75 million) to subsidize domestic airlines for the current fiscal year.
It allocated a total of NT$255 million to the airlines for the last fiscal year, subsidizing flights for 728,779 people.
A majority of the subsidy funds last year was used to pay for residents of Kinmen and Penghu counties, who accounted for about 42 percent and 49 percent of the funds respectively.
The government can subsidize the airlines in several ways.
Starting in September 1999, for example, aircraft and helicopters service providers became eligible for landing fee exemptions if they were willing to provide services to remote areas of the country.