TransAsia Airways Ceases Operations
Domestic airline TransAsia Airways declared it insolvency on November 22, after years of lackluster sales and revenue losses and two horrific crashes within a seven-month period that killed more than 90 people. The airline’s CEO, Liu Tung-ming, said that the executive team had looked at various options including a sale, restructuring, or capital injection before conceding that no credible turnaround plan was available. The airline, which operated 27 routes both within Taiwan and to China and other Asian destinations, suspended all flights as of November 22, stranding some 100,000 ticket holders and forcing more than 1,700 staff out of work. Tickets will be honored by several other domestic carriers, including China Airlines.
The company blamed its low load factor of 60% capacity – far below industry averages – on declines in Chinese tourism, a charge echoed by the opposition Kuomintang (KMT), while also indicating that rising fuel costs and a higher U.S. dollar had made its position untenable. Observers noted, however, that numerous safety violations and the two disastrous crashes were the primary reason that the airline had lost so many customers. In both crashes, human error was cited by as a primary factor.
Related to the declaration of insolvency, TransAsia chairman Vincent Lin was arrested by prosecutors on charges of insider trading and fraud in an investigation into the airline’s demise and was released on bail of NT$5 million (US$156,534). Cheng Shan-shan, a relative of Vincent Lin who worked for businesses affiliated with TransAsia, was also arrested and charged with insider trading and other financial crimes before being released after posting NT$5 million bail.