UNITED AIRLINES CONCERN ON FORCE MAJEURE DELAY

UNCLAS SECTION 01 OF 02 TAIPEI 002124

SIPDIS

SENSITIVE

DEPT FOR EAP/TC, EB/TRA/OTP

E.O. 12958: N/A
TAGS: EAIR ECON TW
SUBJECT: UNITED AIRLINES CONCERN ON FORCE MAJEURE DELAY
LIABILITY

Summary
--------------


1. (SBU) United Airlines raised concerns with AIT/T about
Taiwan's Civil Aviation Law, which imposes compensation
liability on airlines for delay due to causes beyond the
control of the airline (force majeure). AIT agrees with
United that the relevant regulation is not consistent with
the Montreal Convention of 1999. The American Chamber of
Commerce in Taipei will include this issue in its white
paper for 2005. Taiwan's Civil Aeronautics Administration
(CAA) has drafted an amendment that would redress United's
concerns, but has decided not to submit it to the
Legislative Yuan (LY). CAA informed AIT/T that there are
several areas in which the Civil Aviation Law is not
consistent with the Montreal Convention, but most of the
other areas favor the interests of the carriers. Wu said
that the airlines would continue to urge CAA to submit the
amendment to the LY, but she believes there is no need for
AIT/T to further engage the Taiwan government on this issue
at this time. End summary.

Airline Concern
--------------


2. (SBU) United Airlines Taiwan Manager Andrea Wu
approached AIT/T Econ Section to raise concerns about
Taiwan Civil Aviation Law Article 91, which requires
airlines to reimburse passengers for expenses incurred due
to delay -- even if the cause of the delay is beyond the
control of the airline (force majeure). (The relevant text
of Article 91 is provided below.) She reported that this
requirement has resulted in considerable additional expense
for airlines, especially during the last Lunar New Year
travel period, which saw numerous delays due to fog in
Taipei. She also expressed concern that the requirement
raised expectations of Taiwan passengers and potentially
exposed carriers to liability when Taiwan passengers travel
in other regions. Wu argued that the current Taiwan
regulation is not consistent with international practice or
the Montreal Convention of 1999. AIT/T agrees with Wu's
assessment.


3. (SBU) Wu also explained that Taiwan's Civil Aeronautics
Administration (CAA) had drafted an amendment that
corrected the problem and followed the Montreal Convention
standards. (Text of the draft amendment is provided
below.) However, CAA had informed the airlines that it had
decided not to put the amendment forward to the Legislative
Yuan (LY) during the current session. According to Wu, CAA
was reluctant to add another item on top of numerous
security related amendments that it had to move forward.
Wu added that CAA wanted to address the problem instead by
asking airlines to document their current compensation
practices with CAA. It was not clear to Wu (nor is it to
us) how this would help resolve carrier concerns. Wu told
econoff that United would not comply with this request
unless ordered by Taiwan courts to do so. She argued that
providing such documentation would tacitly confirm the
liability of the carriers.


4. (SBU) Wu, who recently completed a term as the president
of the American Chamber of Commerce in Taipei (Amcham),
informed us that Amcham would include this issue in its
annual white paper for 2005. Taiwan's European chamber
included it in its white paper this year. Northwest
Airlines Taiwan Manager Raymond Chang called econoff at
Wu's request to confirm that Northwest shared United's
concerns and agreed with Wu's assessments. Amcham member
British Airways also concurs.

CAA Plans
--------------


5. (SBU) In an April 28 meeting with CAA Air Transport
Director Peter C.W. Hou, econoff inquired about CAA's
position on the issue and plans to amend Article 91. Hou
agreed that the current regulations are not consistent with
international standards. He confirmed that CAA had drafted
an amendment but decided not to put it forward to the LY
during this session. In addition to the argument cited by
Wu that CAA had too many other amendments to move forward,
Hou also claimed that CAA feared that proposing an
amendment to Article 91 could lead to unforeseen negative
consequences for air carriers. He explained that LY
members are generally much more sympathetic to the concerns
of consumers (voters) than air carriers. According to Hou,
CAA fears that if asked to address Article 91, LY members
will seek to find other ways to increase the benefits of
the Civil Aviation Law to consumers at the expense of the
airlines.


6. (SBU) Hou also told econoff that his office had recently
analyzed all of the regulations in the Civil Aviation Law
to identify those that were not consistent with
international standards. Hou claimed that of all of those
areas identified, Article 91 was the only one that favored
the interests of consumers. All others benefited the
carriers. He provided econoff a copy of the report
(available only in Chinese). Our review of the study also
concludes that where the Montreal Convention and Civil
Aviation Law differ, the Civil Aviation Law more often
favors the carriers.

Next Steps
--------------


7. (SBU) After discussing this issue with CAA, AIT/T went
back to United's Wu to discuss the carrier's strategy for
resolving this problem. Wu was not aware of the Civil
Aviation Law's other disparities with the Montreal
Convention that favor the carriers. She informed econoff
that the airlines and Taipei's Amcham would continue to
push the Taiwan government to amend Article 91. She did
not feel it would be necessary for AIT to further engage
the Taiwan government at this time.

Article 91 Text
--------------


8. (U) The following is the relevant text of Article 91 and
CAA's draft amendment:

Begin current text: If any passenger suffers a loss due to
flight delay, the air carrier shall be liable for damage,
provided that such delay is caused by force majeure, and
there is no established customary practice, such damages
shall be limited to the necessary additional expenses
incurred by the passenger due to the delay. End current
text.

Begin amendment text: The air carrier shall be liable for
damages occasioned by delay in the transportation of
passengers, baggage or goods. The air carrier shall not be
liable if he proves that he and his agents have taken all
necessary measures to avoid the damage or that it was
impossible for him or them to take such measures. End
amendment text.
PAAL