Garuda may stop European flights<\/p>\n
JAKARTA (JP): National flag carrier Garuda Indonesia is
\nconsidering reducing or stopping its remaining flights to Europe
\nin a cost-saving measure, an airline official said yesterday.<\/p>\n
\"Garuda is currently reevaluating the European routes. We may
\nreduce the existing European flights or even stop flying the
\nroutes at all,\" said Pudjobroto, a spokesman for the
\nairline.<\/p>\n
He said that the long-haul European routes were very costly to
\nmaintain since the rupiah's sharp plunge against the U.S.
\ngreenback.<\/p>\n
Garuda has already stopped six of its 10 routes to Europe
\nincluding to Madrid, Munich, Vienna, Zurich and Rome in the wake
\nof the monetary crisis, he said, adding that the airline had
\nembarked on a code-sharing cooperation agreement with Swissair
\nand Lauda Air to serve passengers from Jakarta to Zurich and
\nVienna and vice versa.<\/p>\n
\"We are now only serving Paris, London, Frankfurt and
\nAmsterdam,\" Pudjobroto said.<\/p>\n
He added that Garuda was also considering letting KLM fly the
\nroutes through the code-sharing mechanism.<\/p>\n
Garuda's newly appointed president Robby Djohan said after
\nbeing appointed on June 15 that downsizing the airline and
\nrestructuring its operations would be his top priority in order
\nto ride out the current economic turbulence.<\/p>\n
Garuda at present operates 52 aircraft, of which 24 are leased
\nfrom foreign firms. Last month the airline returned six leased
\naircraft to reduce costs. Robby said that it might be sufficient
\nfor Garuda to only have 37 airplanes during the current difficult
\ntimes.<\/p>\n
Garuda reportedly has US$200 million in foreign obligations,
\nhalf of which are due this year.<\/p>\n
Tax exemptions<\/p>\n
Minister of Communications Giri Suseno Hadihardjono said
\nyesterday that the government would provide tax exemptions and
\ncredit facilities to help ease the burden faced by the country's
\nailing airline industry.<\/p>\n
The import duty and value added tax on the import of aircraft,
\nmachinery and components would be waived, he said in his opening
\nremarks at a seminar on the transportation industry.<\/p>\n
He said that the value added tax and income tax on leased
\naircraft would also be terminated temporarily.<\/p>\n
Furthermore, airport service tariffs will be based in rupiah
\nand airlines will be allowed to use their own ground-handling
\nfacilities.<\/p>\n
The airlines would also be allowed to pay for their fuel
\nthrough a credit mechanism, he said.<\/p>\n
He didn't give the timetable for the introduction of the these
\nfacilities.<\/p>\n
Giri explained that the sharp plunge of the rupiah against the
\ndollar had caused the operational costs of the airline industry
\nto soar because 60 percent of their overheads are in dollars.<\/p>\n
The current monetary crisis has also seen the number of
\ndomestic passengers slump to 2 million in February from 4.2
\nmillion in July, when the crisis started.<\/p>\n
Such difficulties have forced the airlines to return many of
\ntheir leased aircraft and stop servicing certain routes.<\/p>\n
\"If these sufferings continue for a long time, the national
\nairlines will go bankrupt,\" he said.<\/p>\n
Ridwan Fatarudin, a former president of state-owned Merpati
\nNusantara Airlines said the national airline industry had been
\noperating with negative capital for the past few years.<\/p>\n
An aggressive expansion program launched in 1993 caused an
\noversupply, forcing most airlines to sell tickets at lower
\nprices, Ridwan explained.<\/p>\n
He urged the airlines to attract new investors or form
\nalliances with foreign operators.<\/p>\n
In order to attract investors, however, the country's airline
\nindustry should be further deregulated and restructured.<\/p>\n
He pointed out that the complicated bureaucracy required to
\nget permits to import aircraft should be cut down and handled by
\na single office.<\/p>\n
The country's open sky policy which allows foreign airlines to
\ndirectly fly to several tourist destinations should also be
\nreviewed, he said.<\/p>\n
Indonesia currently has five scheduled airlines: the state-
\nowned Garuda and Merpati, and private airlines Mandala, Bouraq
\nand Dirgantara Air Service. Privately owned Sempati Air recently
\nceased operations. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/garuda-may-stop-european-flights-1447893297",
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