US embassy cable - 05TAIPEI2124

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