A study of the remote areas air service subsidy policy in Taiwan

In Taiwan, the economic viability of a domestic flight route is evaluated on the basis of its demographic, geographic, and economic characteristics. This paper explains the methodology used to differentiate the market characteristics of a remote areas air service subsidised community policy from a non-subsidised one. In order to quantify the differences between the market characteristics of these two groups, a discriminant analysis was conducted. The following variables were used to test the forces that affect the subsidy programme (1) Subsidy Status; (2) Size of Population; (3) Distance; (4) Level of Service; (5) Market Demand; (6) Competitive Pressure; and (7) Unit Fare. The research results indicated a need to regroup the subsidised and non-subsidised remote areas air service. The final discriminant function was seen to be primarily based on passenger demand and seat capacity. Hopefully, as a result of this study's findings, the remote areas air subsidy programme in Taiwan will be carried out more smoothly than before and provide a good subsidy model for other areas in Asia.