Taiwan's China Airlines' (CAL) government owners are forcing yet another top-level shake-up over its poor safety record following a Boeing 747-200 crash on 25 May.
The carrier's main shareholder, the China Aviation Development Foundation (CADF), saw its entire board resign after the accident, in which all 225 passengers and crew were killed. The airline itself is working on top-level changes.
Fresh calls for a revamp within CAL and the CADF were made by many in Taiwan's government just after the crash. The aircraft, operating between Hong Kong and Taipei, mysteriously broke apart while in cruise and crashed into the sea, in the airline's fourth fatal accident since 1994. Personnel rejigs have followed most previous incidents.
In addition to boardroom changes, the government has promised to revive suspended privatisation plans. Premier Yu Shyi-kun says a "concrete plan" to reform CAL's main shareholder will be put forward and the airline should be privatised within two years.
Early in 1999, a year after a CAL Airbus A300-600R crashed near Taipei's international airport, killing 202 people, the CADF announced its intention to dispose of half its stake in the carrier -in part to bring in foreign management expertise. But the sale plans were later abandoned after officials claimed that there was a lack of foreign airline-interest. Many speculated at the time, however, that the CADF was simply unwilling to allow a foreign carrier to have too much control.
The fallout from the latest crash has not stopped at boardroom changes and calls for privatisation. It has also cost CAL a codeshare deal with Delta Air Lines. The two had planned to start collaborating on transpacific and US domestic routes in June, but Delta quickly put the plan on hold and it is unclear when or if the agreement will be reinstated.
CAL is, at the same time, facing the threat of its home-based rival, EVA Air, winning new frequencies on lucrative routes between Hong Kong and Taiwan. An expanded air services deal has been in the works and CAL had been hoping EVA would not win as many of the new operating rights as it wanted. CAL now concedes that EVA may win more rights than it first thought in the wake of the accident. But while it is under pressure, CAL does not forecast any cuts to its bottom line for the full year.
Source: Airline Business
