LawUpdate on Aviation


On April 25, 2018, Taiwan Civil Aviation Act has been amended to require, among other things, airline companies when intending to suspense or cease its business operation (whether in part of in whole) must comply with prior report and approval procedures; that the airline companies should submit the application with its business suspension or cessation plan to the Civil Aeronautics Administration ("CAA") and the CAA then re-submits to the Ministry of Transportation and Communications ("MOTC") for prior approval. The business suspension or cessation cannot be proceeded until 60 days following receiving the MOTC's approval. Failing to follow such procedures, the responsible persons (directors and managerial persons of the airline company) will be subject to up to three years imprisonment.

To implement the said law amendments, on June 1, 2018, the Regulations for Operation of Air Transport Enterprises were amended to lay out detailed procedures for making the application.

With the new law amendments enforced through criminal punishment, in the event a Taiwan airline company runs into insolvency situation, it would take cautious steps in planning and making the crucial decision, and the relevant business suspension or cessation plan should be submitted to the CAA for prior approval. Such prior approval procedures would facilitate foreign lessor's exercise of repossession right of the aircraft and getting the CAA's approval for de-registering the aircraft from Taiwan registry, as when the foreign lessor files for the de-registration, the CAA should already have the Taiwan airline lessee's business suspension or cessation plan, thus the foreign lessor may save some agony in providing substantiating documents.