Govt stops issuing licenses for crowded airlines industry<\/p>\n
Leony Aurora, The Jakarta Post, Jakarta<\/p>\n
The government has decided to stop issuing operating licenses for
\nnew airlines because it says there is already enough competition
\nin the industry.<\/p>\n
Minister of Transportation Hatta Radjasa said on Wednesday
\nthat with the current growth of passengers, the existing 22
\nairlines and 35 air charter services were more than enough to
\ncover demand.<\/p>\n
\"If the growth enables more airlines, we'll see. But for now,
\nwe will stop (issuing licenses). There is no need to add new
\nairlines,\" said the minister after a meeting between his
\ndepartment and the Indonesian National Air Carriers Association
\n(INACA).<\/p>\n
This measure was taken to create a healthy business climate in
\nthe industry, Hatta said. \"(The existing airlines) can
\nconsolidate (their businesses), strengthen their capital and
\nrejuvenate their planes,\" he said.<\/p>\n
The ministry is also in the process of auditing all existing
\nairlines, including their financial reports, aircraft, and
\nmaintenance procedures.<\/p>\n
Such an audit was deemed necessary in light of a crash
\ninvolving an aircraft from budget airline Lion Air three weeks
\nago. The company's Boeing MD-82 plane flying from Jakarta skidded
\noff a slippery runway after landing at Adi Sumarmo International
\nAirport in Surakarta, and 26 people were killed.<\/p>\n
Some in the industry have questioned whether the carrier had
\ncut down on safety procedures and maintenance costs to charge
\nlower fares.<\/p>\n
\"All airlines will have to show their cost (calculations) and
\nprove that they are reasonable,\" Hatta said.<\/p>\n
It is unclear yet when the audit's results will be announced
\nto the public.<\/p>\n
The government has also floated the idea of re-establishing
\nminimum fares for airlines to ensure standards are met, a move
\nviewed coolly by the business sector and consumer groups.<\/p>\n
Before any decision was made on minimum fares, it would need
\nto be discussed with INACA, the Business Competition Supervisory
\nCommission (KPPU), and the Indonesian Consumers Foundation
\n(YLKI), Hatta said.<\/p>\n
\"All parties will sit down together and talk about this.\"<\/p>\n
Budget airlines started rapidly growing in Indonesia after the
\ngovernment scrapped minimum fares for the sector in 2002,
\nenabling more Indonesians to travel by plane. Many prices offered
\nwere comparable to or even cheaper than other modes of
\ntransportation like passenger ships and trains.<\/p>\n
The lowest cut-price fares were about 30 percent of the
\ncurrent \"ceiling fares\", which are stipulated by ministerial
\ndecree No. 9\/2002.<\/p>\n
YLKI chairwoman Indah Suksmaningsih has criticized the plan,
\nsaying that the government should instead focus on establishing
\nproper regulations instead of re-introducing tariffs.<\/p>\n
KPPU member Syamsul Maarif such price limitations were \"anti-
\ncompetition\" and would a step constitute a step back for the
\nindustry.<\/p>\n
The KPPU and the transportation ministry are scheduled to
\ndiscuss the fare issue next week.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-stops-issuing-licenses-for-crowded-airlines-industry-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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