Garuda seeks aid to avoid grounding<\/p>\n
By Tantri Yuliandini<\/p>\n
JAKARTA (JP): National flag carrier PT Garuda Indonesia has
\nsent a letter to the government requesting financial support
\nagainst possible grounding at overseas destinations due to
\ninsufficient insurance coverage, a senior executive said.<\/p>\n
The plea came in response to the global aviation insurers'
\ndecision to limit liability coverage for injury and damage to
\npeople and property on the ground from terrorism, hijacking, and
\nother war risks.<\/p>\n
Garuda's vice president for corporate communications Pujobroto
\nsaid on Wednesday that the airline had sent a letter to the
\nMinistry of Finance on Tuesday and would follow it up with a
\nseries of meetings with the government.<\/p>\n
\"Reflecting on the seriousness of recent developments in the
\nindustry, I think it logical that Garuda should also ask the
\ngovernment for a guarantee,\" he told The Jakarta Post.<\/p>\n
Pujobroto said that the state-owned airline had not presented
\nthe government with any figures and that it would discuss the
\ndetails with related ministries, including the state ministry for
\nstate enterprises.<\/p>\n
Airlines around the world have been turning to their
\nrespective governments for help after insurance companies decided
\nto cap third party war and terrorism insurance at US$50 million
\nfrom the previous $2 billion maximum.<\/p>\n
Aviation analysts said the minimum coverage should be $750
\nmillion.<\/p>\n
Without adequate insurance coverage, the airlines face the
\nlikelihood of being grounded, as the U.S. and some other
\ncountries plan to restrict the flights of airliners that do not
\nhave sufficient insurance.<\/p>\n
Separately, Garuda's director of finance Emirsyah Satar was
\nreported by Dow Jones newswire as saying that at the moment the
\nairline was operating normally as airports around the world had
\nyet to refuse access to carriers with insufficient coverage.<\/p>\n
He said that Garuda had taken out a policy that provided
\ncoverage of up to $150 million with an insurer in London, and was
\ncurrently negotiating for an additional policy that would extend
\nthe coverage to $750 million.<\/p>\n
The Indonesian Air Carriers Association (Inaca) said that
\nIndonesian airlines had been given notice from insurers that as
\nof Oct. 1 they would increase their premium fees.<\/p>\n
Inaca chairman Wahyu Hidayat said that the insurance premium
\nfees were to increase by 0.05 percent of the total coverage from
\nthe previous 0.01 percent a year, and an additional increase of
\n$1.25 for each passenger. In the meantime the liability coverage
\nwas reduced to only $50 million from the previous $500 million,
\nhe said.<\/p>\n
Wahyu told the Post that the association had yet to decide on
\npetitioning the government for support, and that it would hold
\nextensive talks with its members before moving to do so.<\/p>\n
He said that the association would like the government to
\nsubsidize the premium for higher liability coverage, but \"We
\nrealize that it will be difficult for the government to grant a
\nguarantee, if it (the government) has no money.<\/p>\n
\"You know yourself how the government had to beg to obtain a
\nmere $400 million from the IMF,\" Wahyu remarked.<\/p>\n
Earlier an executive of the association said that privately
\nowned domestic airline PT Mandala Airline had asked Inaca to
\npetition for a government subsidy.<\/p>\n
Wahyu admitted that the $50 million coverage would not be
\nenough to cover the risks taken by airlines, but that Indonesian
\nairlines could not afford to cease operations altogether.<\/p>\n
And the risk of having insufficient insurance coverage \"was
\nbetter than being grounded and not making any money at all,\"
\nWahyu said.<\/p>\n
The director of finance of PT Merpati Nusantara Airlines,
\nanother state-owned airline, Budiman Rafioedin said that as a
\nresult of the premium increase a price increase for tickets was
\nunavoidable.<\/p>\n
\"Maybe not immediately in October, but in one or two months
\ntime,\" he said, adding that there would likely be an increase of
\nabout Rp 15,000 ($1.60) a ticket.<\/p>",
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