Latest from Taiwan today reporting that China Airlines is currently a major hike of the insurance costs. China Airlines' insurance company has calculated that China Airlines have to pay USD$120million insurance cost for it's whole fleet between Oct 1, 2002 to Sep 30, 2003.
China Airlines' insurance cost for 2001-2002 is USD$60million. The insurance company has also asked China Airlines to pay a tougher "guarantee fee".
If China Airlines unable to lower the price, it'll replace Korean Air as the #1 airline in the world to pay the most expensive insurance cost.
The reason why CI have to pay such price is mainly due to the September 11 terrorist attacks, and the crashed of B747-200 on May 25.
According to a statistic, every airline paid around USD$1 billion for annual insurance. In Recent years, Korean Air and China Airlines' insurance costs is 16% of the worldwide insurance costs. Korean Air paid USD$110million, and China Airlines paid USD$45million.
China Airlines currently have 41 pax jet and 13 Freighter, while Korean Air have 100 pax jet, and 19 Freighter.
China Airlines asked it's insurance company to lower the price. CI raised 2 points:
1. China Airlines will announce new orders in the near future, which will lower the average fleet age.
2. CI611 crash investigation is still going on, and the crash of the 742 didn't show it's a human error.
Meanwhile, CI have to pay a special "guarantee fee" like they did in 1998. CI paid USD$10million for the guarantee fee in 1998 in order to continue it's operations.
If China Airlines unable to reached a deal with the insurance company, effective October 1, 2002, China Airlines will be forced to shut down.
However, China Airlines' CEO says that the insurance cost is under USD$100million.