Lift restrictions in airline industry: INACA<\/p>\n
JAKARTA (JP): The Indonesian National Air Carriers Association
\n(INACA) has called on the government to lift restrictions
\ndisallowing foreign equity investors to acquire a majority stake
\nin local chartered airlines.<\/p>\n
INACA secretary-general Benny Rungkat said on Monday the
\nremoval of the policy on foreign investment was essential to help
\nthe country's ailing unscheduled airline operators.<\/p>\n
"Chartered airlines seriously need foreign equity partners to
\nfinance the expensive leasing or purchasing of aircraft. But no
\nforeign investors are interested in investing when the regulation
\ndoes not allow them to acquire more than a 50 percent stake in an
\nairline," he told The Jakarta Post.<\/p>\n
He said the government should also introduce a simpler and
\nmore transparent regulation that would attract foreign investors
\nto collaborate with existing local chartered airlines, if they
\nwere not allowed to open their own chartered fleets here.<\/p>\n
"The government should also allow foreign investors to form
\njoint-venture companies with local chartered airline operators
\nand hold a majority stake if they want to. The government should
\nliberalize the local chartered airline sector the way it has
\nliberalized the banking sector," he said.<\/p>\n
According to existing regulations, multinational joint-venture
\ncompanies are restricted from undertaking business in fields
\nconsidered to be vital to the country and to the livelihood of
\nthe population at large, including airlines, drinking water
\nsupply, shipping, public railways, electricity transmission and
\ndistribution, telecommunications and mass media.<\/p>\n
The government, however, has lifted the restriction in some
\nfields, such as telecommunications and drinking water supply, by
\nallowing foreign investors to form joint-venture companies, but
\nonly with state-owned companies.<\/p>\n
Benny said chartered airline operators could not really
\nutilize the opportunity given by the Ministry of Communications
\n-- which recently liberalize the sector by issuing more licenses
\nto new operators and allowing chartered airline operators to fly
\nroutes usually managed by scheduled commercial airlines --
\nbecause they had no funds to lease or buy aircraft.<\/p>\n
Between four and six operation licenses were issued this year
\nto increase the number of chartered airline operators to 37. They
\nhold licenses to serve mostly remote areas and islands across the
\ncountry.<\/p>\n
Benny said the new chartered airline operators needed at least
\nUS$8 million to obtain a secondhand aircraft, such as a Boeing, a
\nFokker 28 or a DC9.<\/p>\n
He said chartered airlines now had a broader chance to expand
\ntheir coverage since several scheduled commercial airlines had
\ncanceled their flights to less profitable destinations.<\/p>\n
State-owned airline Merpati Nusantara, which dominated
\nservices to remote areas especially in Indonesia's eastern
\nprovinces, canceled most of its flights after grounding around 70
\npercent of its fleet.<\/p>\n
National flag carrier Garuda Indonesia, which flies to 20
\ncities across the country, has not canceled any flights but has
\nreduced the frequency of services to less profitable
\ndestinations.<\/p>\n
The sharp depreciation of the rupiah since late 1997 has
\nseverely damaged the industry. Airlines' rupiah earnings were
\neaten away by overhead costs, which are quoted in U.S. dollars.
\nThe national average load factor fell by more than half to only
\n30 percent in 1998.<\/p>\n
Benny also called on the government to stop delaying the
\nimplementation of its plan to rescue the country's ailing airline
\nindustry, the debts of which total around $300 million, excluding
\nthe debts of Garuda Indonesia and defunct private carrier
\nSempati.<\/p>\n
He said there was no follow-up after the government announced
\nearlier this year a plan to assist the ailing local airline
\nindustry by allocating some $345 million, around $40 million of
\nwhich was earmarked especially for chartered airline operators.
\n(cst)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/lift-restrictions-in-airline-industry-inaca-1447893297",
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