JP\/22\/U12
\n;JP;
\nANPAc..r..
\nAirlines-domestic-carrier<\/p>\n
Flying through the shadow of stiff rivalry<\/p>\n
I. Christianto
\nContributor
\nJakarta<\/p>\n
With more domestic airlines in operation there has been a
\ntightening of the competition among local carriers, most of which
\ncontinue to focus on proven profitable routes.<\/p>\n
The tighter competition has unavoidably led to a price war,
\nand in certain cases has also brought additional advantages for
\npassengers.<\/p>\n
On the Jakarta-Surabaya route, one of the most profitable
\ndomestic air routes, state-owned Garuda Indonesia, for example,
\nis offering a special rate of Rp 385,000 (one way), which is much
\ncheaper than the normal rate of Rp 659,000 (about US$77.60).<\/p>\n
Some private airlines are offering even lower rates on the
\nsame route. Mandala Airlines has one-way tickets for Rp 300,000,
\nLion Air for Rp 279,000 and Pelita Air Rp 215,000.<\/p>\n
On the Jakarta-Medan route, Garuda has a promotional rate
\nof Rp 556,000 for a one-way ticket, compared to the normal rate
\nof Rp 1.15 million. On the same route, Mandala charges Rp 756,035
\nand Lion Rp 759,000 for one-way tickets.<\/p>\n
The Jakarta-Denpasar route is also the scene to an active
\nprice war. Garuda is promoting one-way tickets for Rp 685,000
\n(normally 805,800), while Bouraq and Mandala have tickets for Rp
\n600,000 and Rp 595,000, respectively. State-owned Merpati
\nNusantara Airlines currently has the cheapest rate at Rp 480,000.<\/p>\n
Many airlines generally offer cheaper tickets for flights
\nearly in the morning or late at night. Flying with new aircraft
\nusually costs more.<\/p>\n
The Indonesian National Air Carriers Association (INACA) says
\nthe number of domestic air passengers will continue to surge in
\nthe coming years, partly due to greater economic growth in some
\nprovinces.<\/p>\n
According to data from the association, the number of air
\ntravelers rose slightly to 8.96 million last year from 8.27
\nmillion in 2001 and 7.58 million in 2001.<\/p>\n
This number is projected to increase to 9.65 million this year
\nand 10.34 million in 2004.<\/p>\n
Air passenger numbers were climbing in the late 1990s until
\nthe economic crisis hit in 1997, slashing the number of air
\npassengers by more than half from 13.4 million in 1997 to 6.2
\nmillion in 1998. The number of passengers rose to 7.5 million in
\n1999.<\/p>\n
The airline industry can still be seen as having promise. The
\ncompetition in the domestic sector, however, can be expected to
\nbe much sharper despite the projected increase in passenger
\nnumbers.<\/p>\n
The president of Garuda, Indra Setiawan, said the airline
\nwould avoid price wars though it would remain aggressive in
\nmaintaining its dominance in the domestic market.<\/p>\n
He acknowledged that the competition could be even tighter
\ndespite the projected higher growth for the next three
\nyears.<\/p>\n
Indra, who is also the chief of INACA, said the ticket pricing
\nsystem in Indonesia gave domestic carriers the chance to compete,
\nbut he warned that the system could be fatal for weaker airlines.<\/p>\n
At present, the range of tariffs set by the government has no
\nprice floor. This allows airlines to put their prices as low as
\npossible. In the past, airlines were not allowed to cut their
\nprices below a set floor price.<\/p>\n
Awair International, a new private airline, recently suspended
\nits operations due to the competition. The airline temporarily
\nstopped its flights linking Jakarta and Denpasar, Surabaya and
\nMedan. It plans to resume operations on June 1, possibly with new
\nroutes.<\/p>\n
"Recent developments in the country's airline industry,
\nespecially the rapidly decreasing prices due to competition, have
\nmade airline operations too burdensome economically and could
\nthreaten business survival," Awair said earlier this year
\nregarding its suspension of operations.<\/p>\n
It was the first operation suspension by a domestic airline
\nsince the government liberalized the sector in the middle of
\n2000. Sempati Air was declared bankrupt in 1999 with debts far
\nexceeding its assets.<\/p>\n
Regarding the double blow of war in Iraq and the worldwide
\nhealth panic caused by SARS, he said Garuda had prepared a
\n"contingency plan" and a "crisis center" to monitor every
\ndevelopment related to operations (flight safety) and the
\ncommercial aspects (cost and revenue) of the business.<\/p>\n
"The war in Iraq and the mysterious and deadly flu-like virus
\nhave affected all business activities, including the airline
\nsector," he said.<\/p>\n
The aviation industry will suffer even more if the war lasts
\nlonger than expected, not only due to the decline in the number
\nof passengers but also because of higher fuel prices and
\ninsurance premiums, he said.<\/p>\n
Garuda has cut in half to four its weekly flights linking
\nJakarta and Jeddah, Riyadh and Dammam due to the Iraq war. And
\nSARS has led the airline to cut its flights by half to Singapore,
\nHong Kong and Shanghai. The spread of the disease has, in fact,
\nhad a greater impact on passenger numbers than the Iraq war.<\/p>\n
Data from the Directorate General of Aviation at the Ministry
\nof Transportation shows that there were 30 airlines as of March
\nthis year. Of this number, 19 airlines are in operation, nine
\nare not yet operating and two others are idle. The operating
\nairlines have a total fleet of 180.<\/p>\n
Among the new airlines in operation are Air Paradise, Alatief
\nAlair International, Asia Avia Megatama, Nusantara International
\nServices, Rusmindo Internusa, Satrio Mataram Airlines and Manado
\nAirlines.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/jp22u12-1447899208",
"image": ""
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