Protecting passengers, employees after TransAsia dissolution

  • Date: 2016-12-19

I. Background

On November 21, 2016 TransAsia Airways, one of Taiwan’s largest carriers, unexpectedly announced that all of its flights would be suspended for the following day, November 22, for one day. Following an extraordinary meeting of the board of directors on the morning of November 22, however, TransAsia announced that the company would be dissolved, and that from that day on, the company would no longer conduct domestic, international or cross-strait flights.

Responding to this abrupt decision, the Executive Yuan promptly demanded that the airline embrace its corporate responsibility, and instructed the Ministry of Transportation and Communications (MOTC) and the Civil Aeronautics Administration (CAA) to set up an emergency response team.

The Executive Yuan also met three times on November 22 and 23 with the MOTC, Ministry of Labor (MOL), Ministry of Economic Affairs, Ministry of Justice (MOJ) and Financial Supervisory Commission, and formed an interministerial task force to coordinate strategies for minimizing the impact of the airline’s dissolution on passengers, employees and travel agencies.

 

II. The government’s response

A. Put travelers’ rights first

1. Help passengers with flight changes, refunds and repatriation:

The government promptly demanded that TransAsia fulfill its responsibilities to travelers and provide all needed assistance. For cancelled international flights, passengers received refunds from TransAsia or were rebooked on other flights. Travel agencies helped rebook group tourists on other carriers, while China Airlines and EVA Air helped individual passengers and flew stranded travelers back to Taiwan on discount fares.

For domestic flights, the government coordinated assistance by other airlines, and asked the Taiwan Railways Administration (TRA) to transport stranded passengers on routes operated exclusively by TransAsia such as Hualien-Taipei and Hualien-Taichung.

TransAsia also set up an NT$600 million (US$18.89 million) account in trust to provide refunds for tickets already sold, with the first batch of refunds paid out on December 2, 2016.

2. Provide customer service and complaint channels:

The government ordered TransAsia to provide a customer service hotline (02-4128-133) to issue full ticket refunds. The CAA also set up a toll-free hotline (0800-211-798) and email (gencaa@mail.caa.gov.tw) to handle consumer complaints about TransAsia, while the Tourism Bureau helped travel agencies rearrange passenger itineraries. The Travel Agent Association of R.O.C., Taiwan and the Travel Quality Assurance Association formed a task force and set up a single service window to handle future consumer disputes and coordinate responses among tourism agencies.

B. Fill transport gap left by TransAsia

1. Short-term measures to transport booked passengers:

The government ordered TransAsia to check with all booked passengers, and asked other airlines to absorb them if possible by scheduling more flights or using larger aircraft. Pursuant to the Civil Aviation Act, the MOTC assigned China Airlines to temporarily take over TransAsia’s domestic, international and cross-strait routes beginning on December 1, 2016. Other airlines, the TRA, maritime transporters and the Ministry of National Defense were also asked to fill in the gap left behind by TransAsia.

2. Long-term measures to reassign air routes:

On December 1, 2016 the government revoked all of TransAsia’s flight rights on international and cross-strait routes. Other Taiwanese airlines interested in taking over or expanding services on TransAsia’s routes to Thailand, Japan, Korea and Macau (where flight capacity and frequency are unlimited under Taiwan’s air service agreements with these countries), may file with the CAA if they have the market demand.

The routes to China and Palau, meanwhile, are subject to flight limitations by bilateral agreements, and will be reassigned to other carriers according to the Regulations Governing Allocation of International Air Traffic Rights and Charter Flights and the Regulations Governing the Permission and Administration of Air Transportation between the Taiwan Area and the Mainland Area. These reassignments will allow other airlines to quickly expand their businesses and serve more customers.

3. Transportation for New Year’s Day and Lunar New Year:

For New Year’s Day 2017, domestic carriers UNI Air, Mandarin Airlines and Far Eastern Air Transport have the capacity to fill the transport gap left by TransAsia. For the Lunar New Year holidays, the three carriers will mobilize larger aircraft (Boeing 738s and Airbus 321s) and add 390 flights, providing a total of 233,754 seats on 2,414 flights to and from three of Taiwan’s offshore islands. Depending on actual demand, the CAA may coordinate a second wave of extra flights.

C. Protect TransAsia employees

1. Salaries and severance pay:

TransAsia has set up a NT$600 million (US$18.89 million) account in trust to pay employee severance and salaries (November salaries were paid on the 30th of that month). On December 1, the MOL asked the Taipei City Government’s Department of Labor to intervene and form a negotiating committee that will propose alternative solutions when necessary and help labor and management reach a consensus swiftly.

If TransAsia’s debts reach NT$20 million (US$630,000), the MOL will ask the immigration authority to bar the company’s executives and owners from leaving the country. The MOJ has already been asked to ensure that the account in trust can be used to pay for employee salaries, severance, pensions and other statutory debts.

2. Job transfer assistance:

The MOTC has asked TransAsia managers to devote extra care to helping TransAsia employees find new jobs. The CAA has organized a pilot recruitment meeting among other domestic airliners and asked them to hire as many TransAsia employees as they can.

Local employment centers under the MOL’s Workforce Development Agency have also set up a single window to provide TransAsia employees with vocational training, job counseling and job matching services to help them to return to work as soon as possible.

 

III. Conclusion

For Taiwan, aviation rights are valuable assets, and the nation’s transportation system relies to a large degree on the airline industry. The abrupt and unapproved suspension of TransAsia flights has not only disrupted domestic aviation, tourism businesses and many people’s travel plans, but also infringed on the rights of the company’s passengers, employees and the general public.

In response, the government has terminated all of TransAsia’s flight operations, revoked its flight rights, and assigned China Airlines to take over in the short term and keep services running. In addition to making sure that TransAsia protects its employees and passengers to the best of its abilities, the government will continue working with other airline companies to fill the transportation gap left by the failed carrier. To reduce the impact of any future unexpected suspension of flights by an airline, the government will also review regulations and supervisory mechanisms, consider heavier liability for the relevant responsible person and board of directors, and strengthen financial early-warning mechanisms.