Approved at Executive Yuan No. 2848 Meeting on July 16, 2003
Released by Executive Yuan Letter No. Tai-(92)-Ching-0920088159 on July 22, 2003

I. Forward

Aviation industry is characteristic of its highly internationalized work sharing. Its high technological level and strict quality requirement makes it widely related to other industries, so its development can often upgrade industry’s technological level and increase product’s added value. Advanced countries worldwide, in view of gaining competitive edge and assuring national security, all give full support to the development of aviation industry, and list it as one of the key strategic industries of the nation. It is for this reason that our government released “Aviation and Space Industry Development Program” in July 1990, which has achieved great results over the past years.
Aviation industry, in broader sense, covers civil aviation industry, military aviation industry, aviation services industry and sports aviation industry, etc. Each is correlated with and dependent on each other. For instance, the top technologies and core capabilities developed in military aviation can be used for the design and production of civil aircraft, while the low-cost technology and management in civil aviation can be used to reduce the production cost of military aircraft. As for aviation services and sports aviation industry, its booming or recession will even directly impact the whole aviation industry. So those advanced countries with successful experience in developing aviation industry are all devoted to the concurrent development of these areas. For example, U.S. government stimulated the development of aviation industry through their long-term devotion to the development of aviation technologies, so as to maintain their air transport and defense advantage. The active participation of U.S. private sector in sports aviation also fosters a pool of manpower and expands the horizon of aviation industry. Singapore, under the strong governmental support, developed their defense, air transport, and aviation industries simultaneously. Within 30 years, Singapore has established a self-dependent civil/military maintenance industry and a world-class aviation services industry. Japan has its civil and military aircraft developed and produced by its heavyweight conglomerates which makes it the largest aviation country in Asia. Japan’s large population involved in sports aviation also makes it a key country to produce extralight aircraft in the world.
In order to promote the upgrade of traditional industries, stimulate domestic economy, expand aviation industrial scale, establish self-reliant defense, and upgrade aviation services quality, Aviation Industry Development Steering Committee was established and Aviation Industry Development Program was formulated, so that the planning and promotion of civil aviation industry, military aviation industry, aviation services industry and sports aviation industry can be carried out concurrently. It is hoped that, through this program, an advantageous environment can be built, economical scale can be realized, production capacity can be expanded, and high-value added industry can be created. Also the government hopes that, by joining global supply chain system, Taiwan can become a key logistic center for global aviation industry.

II.Current Status

1. Civil Aviation Industry:
   After 10 years’ development, currently Taiwan has 54 companies engaged in aerostructures production, 35 companies in engine parts manufacturing, 12 companies in interior parts, 24 companies in avionics and other field, and 18 companies in maintenance field. In manufacturing side, the products that Taiwan can make range widely, including empennage, wing, cockpit, pylon, rib, composite structures, light helicopter, engine combustion liners, fan blade, engine case, inflight entertainment system, power supply magnetics, brushless DC servo motor, GPS, wire harness, seats, trolley, carts, lighting, etc. In maintenance side, Taiwan is capable of doing widebody/ narrowbody aircraft maintenance, engine maintenance, high pressure stator repair, aircraft conversion, etc. The total output (including manufacturing and maintenance) in 2001 amounted to NT$30.7 billion.
2. Military Aviation Industry:
   The production of military aircraft is mainly carried out by Aerospace Industrial Development Corporation. (AIDC). AIDC, formerly known as Aero Industry Development Center under the military authority, has produced several aircraft, including liL-1 Primary Trainer, T-CH-1 Basic Trainer, AT-3 Advanced Jet Trainer, UH-1H Helicopter, F-5A/E Fighter, and IDF Fighter. However, the production of military aircraft has been substantially shrunk after IDF program was completed. Military aircraft maintenance is mainly carried out by ROC Air Force depots, which are estimated to generate about NT$12 billion output annually.
   At present, the policy of “Strategic Outsourcing for Military Aircraft Maintenance” and “GOCO (Government Owned Contractor Operated)” has been officially adopted by our military. Strategic Outsourcing refers to outsourcing the maintenance of complete aircraft, such as B737-800 President Airplane, UH-1H Helicopter, AT-3 Trainer, IDF Fighter, T-700 Engine, to private sector. In 2001, the maintenance value generated by strategic outsourcing was about NT$1,087 million. As for GOCO, our Department of National Defense (MND) has decided to convert their Second Air Logistics Center to GOCO operation by January 2004.
3. Aviation Services Industry:
   Since Taiwan adopted “Open Sky” policy in 1987, the number of aviation services companies has rapidly grown from 4 in early days to 17 in 1996. However, later due to the fierce market competition, the number is decreased to 13 now. At present there are total 17 civil airports and 4 ground service companies in Taiwan. In 2001, Taiwanese airline companies transported total 1,121,615 tons of cargo and 25,378,878 passengers, with revenue amounting to NT$145.1 billion.
4. Sports Aviation Industry:
   Sports aviation has been developed in Taiwan for over 10 years. A population of 5,000 is currently involved in this field. There are about 120 ultralight aircraft and 16 flying grounds in Taiwan. It is estimated that sports aviation market will generate NT$65 million every year in Taiwan.

III.Development Vision

1. Establish Taiwan as Asia-Pacific R&D, Production, Maintenance, and Logistics Center for aircraft, engines, subsystems, and components. 
2. Establish self-reliant military aviation industry.
3. Develop aviation services industry to establish Taiwan as Asia-Pacific air traffic hub.
4. Establish sound environment for sports aviation industry and develop Taiwan as key country in international sports aviation market.

IV.Development Objectives

1. Increase aviation-related investment to total NT$40 billion in next 10 years (2003-2013), with annual production value reaching NT$120 billion by 2013.
2. Develop advanced trainer for military use and establish self-reliant maintenance capability for new-generation military aircraft. Through strategic outsourcing, military aircraft maintenance will be gradually released to private sector in next 10 years, with annual output reaching NT$10 billion by 2013. 
3. Increase the annual revenue of aviation services industry to NT$220 billion by 2013.
4. Increase the annual revenue of sports aviation industry to NT$3 billion by 2013

V.Development Strategies

1. Assist domestic aviation products to obtain certification.
2. Promote bilateral certification to facilitate the development of international market.
3. Make use of governmental and civil resources to encourage private investment in aviation industry.
4. Assist local companies to participate in international cooperation programs and link Taiwan to global supply chain for the production of high value added aviation products.
5. Plan flagship programs to stimulate overall development of aviation industry.
6. Release the development, production and maintenance business of military aircraft for private sector to participate.
7. Open up cross-strait direct flight in due time and expand air transport business in line with government policy.
8. Enhance airport infrastructure and improve air transport and aviation services environment to increase our air cargo/passenger payload and aviation service quality.
9. Promote sports aviation activities to stimulate the development and production of ultralight aircraft.

VI.Key Points for Implementation

1. Assist domestic aviation products to obtain certification.
2. Promote Bilateral Aviation Safety Agreement (BASA) with foreign parties.
3. Assist local aviation industry to secure international business opportunity for aviation production and maintenance.
4. Assist local aviation industry to secure fund for R&D and investment.
5. Bring in foreign investment and key technologies through Industrial Cooperation Program (ICP).
6. Promote civil sector to join the development and production of new military aircraft.
7. Promote GOCO Program and Strategic Outsourcing Program to establish indigenous capability on military aircraft maintenance.
8. Establish certification system for military aircraft.
9. Establish sound legal regulations for the development of military aircraft.
10. Promote cross-strait direct flight in line with government policy.
11. Develop next-generation ATM/CNS System.
12. Assist aviation services companies to improve air transport environments through the use of governmental resources and incentive measures.
13. Plan and build Taoyuan and Kaohsiung Air Cargo Park.
14. Establish sound legal regulations for aviation service industry.
15. Establish legal basis and management statutes for ultralight aerial vehicles.
16. Encourage the development and production of ultralight aerial vehicles.
17. Plan the airspace and flying ground for sports aviation industry.
18. Hold international sports aviation competitions and activities.
19. Train professional personnel for aviation industry.