September 6, 2006
In response to requests from CEPD and foreign trade offices to open up foreign investment in domestic airlines, Civil Aeronautics Administration (CAA) has decided to raise the cap for foreign investment in Taiwan-based airline companies from 33% to 49%. In order to maintain a balance, however, a single foreign company will be allowed no greater than a 25% stake. In addition, CAA will permit private concerns to operate commercial airports. Ministry of Transportation and Communications (MOTC) has already approved the changes, which will be delivered to Executive Yuan this week.
The changes in CAA regulations are partly due to increased competition from the second north-south freeway and the upcoming high-speed rail. They are also in preparation for the highly anticipated agreement to open up direct air cargo lines between Taiwan and China, at which time Taiwan-based airlines will need to increase capital to take full advantage of potential business opportunities. Industry experts predict China Airlines and Eva Airlines will benefit the most from the new regulations, as they tout the most developed air cargo network and are expected to do well if cross-strait shipping becomes a reality.
CAA is allowing privatization of airports but will maintain the government's jurisdiction over navigation, control towers, airport security and quarantine. The administration is now asking companies to offer suggestions on privatizing airports.
In related news, CAA regulations to allow executive jets and private planes have now gone into effect. Airline companies can now offer personalized business jet service with seating for 19 persons or less.
(Economic Daily News, Central News Agency)
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