Garuda imposes US$5 surcharge<\/p>\n
Moch. N. Kurniawan
\nThe Jakarta Post
\nJakarta<\/p>\n
Indonesia's flagship carrier Garuda Indonesia has imposed a
\nUS$5 surcharge on international air tickets since Oct. 1 to
\nfinance the extra cost of higher insurance premiums, according to
\na senior executive of the Association of Indonesian Travel
\nAgencies (Asita).<\/p>\n
Asita chairwoman Meity Robot said that travel agencies had
\nimposed the surcharge on Garuda international flight tickets
\nsince that date.<\/p>\n
\"It (the surcharge) is the first time in a decade. Even the
\nGulf War didn't have an impact like this,\" she told The Jakarta
\nPost.<\/p>\n
Garuda, however, was reluctant to provide an explanation and
\ninstead gave a conflicting statement.<\/p>\n
\"We're still discussing the possibility of imposing a
\nsurcharge,\" Garuda spokesman Pujobroto told the Post.<\/p>\n
Global insurers had raised premiums per passenger for \"third-
\nparty war and terrorism insurance\" following the Sept. 11
\nterrorist attacks on the U.S.<\/p>\n
Airlines must take out the insurance otherwise they will be
\nbanned from flying by their aircraft lessors or from landing at
\ndesignated airports.<\/p>\n
Garuda finance director Emirsyah Satar said earlier this week
\nthat the airline had secured coverage for third-party insurance
\nof up to $1 billion from London firms.<\/p>\n
He said that Garuda must pay additional premiums of between
\n$20 million and $25 million per year for the insurance coverage,
\nbesides having to pay about $10 million per year for hull
\nliability. The premiums will be paid in quarterly installments.<\/p>\n
According to Asita, Garuda joined the growing list of world
\nairlines imposing a surcharge to pass on the burden of the higher
\ninsurance premiums to passengers.<\/p>\n
Meity pointed out that KLM Royal Dutch Airlines had also
\nimposed a $5 surcharge, Philippines Airlines $6, Singapore
\nAirlines $1.25, Thai Airways International $1.25 and Malaysia
\nAirlines $1.25.<\/p>\n
The U.S. attacks have caused a serious blow to the world
\nairline industry, which analysts say was heading toward a
\nprolonged slump.<\/p>\n
It is not clear whether Garuda will also impose a surcharge on
\ndomestic air tickets, although a source at the company said
\nearlier that such a move would be unnecessary if the surcharge on
\ninternational air tickets was sufficient to cover the extra
\ninsurance cost.<\/p>\n
Garuda had been struggling to make a reasonable profit as the
\n1997 regional financial crisis had multiplied its dollar-based
\ncosts but cut down its rupiah-based revenue.<\/p>\n
The airline, which is to be privatized by the government in
\n2003, reported a 90 percent drop in its 2000 net profit to Rp
\n53.24 billion ($5.49 million) due to foreign exchange losses.<\/p>",
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