After 65 years in business, TransAsia Airways announced without warning in November 2016 that it was halting all flights and closing down. The move cost 1,700 employees their jobs and affected more than 100,000 passengers with prior bookings on TransAsia flights. Some in the industry are wondering whether TransAsia’s collapse might foreshadow tough times for other Taiwanese carriers, or if it was simply the result of free market forces. Others are asking if the government should play a role in managing the airline’s collapse. Our Sunday special report. At the beginning of November last year, domestic carrier TransAsia Airways was at the Taipei International Travel Fair pushing big discounts on fares. Just a month earlier, the airline celebrated the start of service on a new route to Sendai, Japan, and was promising future flights to Fukuoka, Japan, and Busan, South Korea.Vincent Lin (October 5, 2016)TransAsia Chairman In line with our opening of this new destination, we are hoping to help our company return to normal operations by the first quarter of next year by optimizing the utilization of our capacity. But not long after TransAsia Chairman Vincent Lin made that statement, the airline suddenly announced it would dissolve, in a considerable surprise to outside observers.Vincent Lin TransAsia Chairman Accumulated losses over the first three quarters of the year surpassed NT$2.2 billion, and we are not optimistic about our prospects going forward. As a result, we have no choice but to make the difficult and painful decision to announce the dissolution of the company. Analysts have concluded that the most direct factor in TransAsia’s demise was the NT$1.2 billion in compensation the company had to pay out as part of settlements in two deadly crashes in 2014 and 2015. Those incidents in turn corroded passengers’ trust in TransAsia, which saw its percentage of seats sold fall from around 80 percent to only 65 percent.In 2014, TransAsia invested NT$2 billion in a new budget carrier named V Air. The subsidiary only lasted for one and a half years before closing in September 2016 with accumulated losses of more than NT$900 million. Prof. Yeh Wen-chienKainan University Air Transportation Dept. TransAsia positioned itself at a middle-of-the-road price point, but about four years ago it moved to restructure, and created V Air to focus on a lower price point. But (when that failed) it had no way to actively move back up to a higher price point, and its economy class service gradually began to overlap with low-budget airline services.With spartan in-flight dining services, fewer flight attendants on board, and routes limited to around 4 hours or less, budget airlines can afford to sell tickets at only 30 to 70 percent of the price of conventional airlines. Those prices have attracted plenty of passengers on shorter local flights. Since 2004, when Jetstar Asia started direct flights between Taipei and Singapore, 20 budget airlines have entered the domestic market, offering 32 different routes, with the fiercest price competition on routes to and from northeast Asia. Prof. Tang Ching-huiNTOU Transportation Science Dept.In the last few years we’ve seen some low-cost carriers change to flying mid-distance and longer routes. Others have added their own business class, and even first-class cabins. But no matter what the future effects of those changes are, we’ve noticed one thing, which is that they will continue to try and develop new sources of potential customers.According to the Civil Aeronautics Administration, combined passenger volume on the 20 budget carriers operating in Taiwan already accounts for 12.8 percent of all domestic airline passengers. They’re putting increasing pressure on Taiwan’s more established airlines even as they bring large numbers of tourists into the country. Prof. Yeh Wen-chienKainan University Air Transportation Dept. I think that if you want to clearly differentiate yourself when it comes to the quality of your services, you can look to many airlines, especially EVA Air and China Airlines, which are constantly upgrading their airplanes and increasing passenger comfort in their various classes of service.Beyond airlines needing to improve their operations and finding new sources of customers, the government also is trying to extend a helping hand. A new policy that came into effect on Aug. 1, 2016 gives citizens of Thailand and Brunei 30-day visa-free travel to Taiwan. The goal is to spur business across the tourism sector, from airlines to tourism operators, and from hotels to restaurants. Wayne Liu Tourism Bureau Deputy Director GeneralOver the past five years, we’ve started to develop Southeast Asia as a new source of tourists. We’re talking about Indonesia, the Philippines, Thailand, and (other countries in the region), as well as India, Dubai, and the Middle East. We’re hoping to increa...
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