Airlines need financial help: Analyst<\/p>\n
M. Taufiqurrahman, The Jakarta Post, Jakarta<\/p>\n
Most airlines plying domestic routes are suffering losses and
\nonly those with strong financial support would survive the
\ncurrent stiff competition, an analyst says.<\/p>\n
Chaidir Tasran, an air transportation expert at Trisakti
\nUniversity, said that the airfares of most airlines were far from
\nadequate to meet their operating costs, and therefore only
\nairlines with strong financial backing could weather the fierce
\ncompetition.<\/p>\n
He said that although most domestic airlines were suffering
\nlosses, they refused to disclose their financial woes.<\/p>\n
\"My experience in Kartika Airlines showed that the airline
\nbusiness generated only a small margin of profit, and that we
\nsurvived only because we had sufficient capital to counter losses
\nfor two years,\" he told The Jakarta Post, adding that Kartika
\nAirlines, however, had to find new owners with solid finances
\nafter it had been bailed out three times.<\/p>\n
He said that most domestic airlines violated the exchange rate
\nbenchmark of Rp 5,000 to Rp 9,000 per U.S. dollar as set by the
\nIndonesian National Air Carriers Association (INACA).<\/p>\n
\"Some even offer an airfare at an exchange rate less than Rp
\n2,000 per dollar,\" he said, adding that passengers could buy a
\nJakarta-Yogyakarta ticket for Rp 180,000.<\/p>\n
Despite the fact that an excessive 74 airlines are registered
\nat the Directorate General of Air Transportation of the Ministry
\nof Transportation and only 19 of them are operating, the
\ngovernment plans to issue more licenses for airlines to join the
\nair travel competition. It is estimated that there will be around
\n9.7 million potential air passengers this year.<\/p>\n
To obtain an air operation certificate from the ministry, an
\nairline company needs only to secure $30,000 as initial capital.<\/p>\n
The leniency in the issuance of licenses enables a bulk of
\nairline companies to start operating in the country. Among the
\nnew airlines are Airmark, Awair, Bayu Indonesia Airlines, Deraya,
\nIndonesia Airlines, Avi Patria, Lion Airlines, Pelita Air,
\nRusmindo Internusa Air, Star Air, Alatief Alair International,
\nAsia Avia Megatama, Bali International Air Services, Nusantara
\nInternational Services and Satrio Mataram Airlines.<\/p>\n
Chaidir, who has been in the airline business for more than 20
\nyears, mentioned Lion Airlines as one that could get ahead of
\nother airlines in the domestic market, because it has strong
\nfinancial backing from its parent company, Singapore Airlines.<\/p>\n
\"With a strong financial backup, the airline can survive the
\ncompetition, even with an extreme reduction of its airfares,
\nwhile waiting for the collapse of the others. The survivors of
\nthe competition will prevail and there will be less competition,\"
\nhe said.<\/p>\n
Another expert, Dudi Soedibyo, said that the fierce
\ncompetition among airlines might mean disastrous consequences for
\npassengers.<\/p>\n
\"With the airfares so low, I doubt if airlines can finance the
\nmaintenance of their air fleet, and this would be very dangerous
\nfor those on board the planes,\" he said, adding that it was
\ndoubtful that the airlines could pay insurance for their
\npassengers.<\/p>\n
Separately, an airline executive said that apart from strong
\nfinancial backup, efficiency was the key to survive the current
\ncompetition.<\/p>\n
Nurwulan Handayani of Star Air told the Post that given the
\ncurrent trend among airlines to lower their airfares, there was
\nno way for her company to not follow suit.<\/p>\n
\"But our airfare reduction is very modest, so that we can
\nstill provide a decent service for passengers. We opt to
\nguarantee the safety of passengers,\" she said, adding that
\nalthough Star Air offered airfares above those offered by other
\nairlines, the company's load factor averaged at 80 percent.<\/p>\n
Despite the low airfares offered by most airlines, there were
\npassengers who cared for service and safety more, and it was to
\nthis segment her company chose to cater, she said.<\/p>\n
Estimate of domestic airline passengers<\/p>\n
2001 8.01 million
\n2002 9 million
\n2003 9.7 million
\n2004 10.4 million<\/p>\n
Source: INACA<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/airlines-need-financial-help-analyst-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }