China Airlines (CAL) on Wednesday said that it does not exclude the possibility of taking over the operations of Tigerair Taiwan after the budget airline posted a loss of about NT$1.2 billion (US$37.9 million) within three years if its launch.
Tigerair Taiwan, a joint venture between CAL and Tiger Airways Singapore Pte Ltd, became the sole Taiwanese low-cost carrier in the nation after V Air suspended its operations on Oct. 1.
Tigerair Taiwan was the focus of a question-and-answer session at the Legislative Yuan’s Transportation Committee on Wednesday, during a review of the Civil Aeronautics Administration’s (CAA) budget.
Minister of Transportation and Communications Hochen Tan (賀陳旦) said that CAL was given three years by its board to turn the financial condition of Tigerair Taiwan around.
Tigerair Taiwan operates 18 routes, but passenger occupancy rates are 70 percent on average, the lowest among all budget airlines, Democratic Progressive Party (DPP) Legislator Lee Jun-tse (李昆澤) said.
The airline’s average ticket price is also more expensive than those of other budget carriers and it was ranked No. 1 in terms of the number of complaints from passengers, he said.
CAL president Hsieh Shih-chien (謝世謙) said that there has been a misunderstanding about the three-year limit, adding that CAL and Tiger Airways Singapore are engaged in talks, which he said are going in a positive direction and could reach a conclusion by the end of this year.
“Two aircraft owned by Tigerair Taiwan would start being operated by CAL before the end of this year. Tigerair Taiwan’s business model will change as well. Some of its flights will be canceled, while some others will be taken over by CAL. The airline will also start offering charter flights,” he said.
CAL has a 45 percent stake in the joint venture, while Tiger Airways has 10 percent.
However, DPP Legislator Yeh Yi-jin (葉宜津) said that Tiger Airways has the right to veto any proposal the board makes.
Hsieh said that CAL has planned to take over Tigerair Taiwan’s operations by buying the shares held by Tiger Airways Singapore.
He said that he was not at the liberty to disclose the price for the share acquisition, as it is confidential information.
In other developments, DPP legislators Cheng Yun-peng (鄭運鵬) and Cheng Pao-ching (鄭寶清) questioned the Ministry of Transportation and Communications’ plan to offer a “diversified taxi service” to counter the challenges brought by ride-sharing application Uber on grounds that taxi drivers cannot compete with the international corporation, which has an estimated market value of US$66 billion.
According to the plan, people who own sedans or vans can apply to become a taxi driver, but they would not be allowed to paint their cars yellow or drive around the city to pick up passengers, the ministry said.
Fares for such taxis would not be capped, but they would need to be approved by local governments, it added.
The ministry also said it will develop a mobile application that allows people to request services from licensed taxi drivers.
Regulations stipulate that a taxi driver can only work with a single taxi company, which makes taxi drivers less competitive than Uber drivers, Cheng Yun-peng said.
Cheng Pao-ching said that Uber drivers can offer services with flexible prices, something that taxi drivers cannot do.
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