New airlines upbeat despite tought competition<\/p>\n
By Christiani Tumelap<\/p>\n
JAKARTA (JP): Seven new airlines are ready to start operations
\nthis year, and are upbeat about their business prospects despite
\nhaving to face tight competition from five long-established
\nairlines.<\/p>\n
The new airlines' executives said here over the weekend that a
\ncontinued increase in the demand for commercial flights within
\nthe archipelago would allow them to survive the tight market.<\/p>\n
The fact that many important routes have been abandoned by the
\nexisting commercial airlines as part of their consolidation
\nmeasures would make their operations in their early years much
\nmore easier, they said.<\/p>\n
The seven airlines to begin operations this year -- AIRWAGON
\nInternational (AWAIR), Pelita Air Service, Indonesian Airlines
\nAvi Patria, Bayu Indonesia Air, Lion Mentari Air (Lion Airlines),
\nRusmindo Internusa Air and Jatayu Air -- said they would
\ninitially operate at areas that were not, or inadequately covered
\nby the five existing commercial airlines.<\/p>\n
Pelita Air president Soeratman said over the weekend his
\ncompany decided to enter the market this year because he believed
\nit was the right time to tap into the predicted growing market.<\/p>\n
\"Many areas have not been properly covered by airline
\nservices. So, we have to enter the market now to provide more
\nsupply to meet the increasing demand,\" he said.<\/p>\n
He said Pelita, which currently operates as a chartered
\ncarrier, was upbeat that it would not need too much time to make
\na profit from its new business.<\/p>\n
Soeratman estimated that Pelita, which had allocated about
\nUS$3 million to lease a Fokker 70 and a Boeing 737-200 to be used
\nin the initial stage, would be able to break even in the second
\nyear of operation.<\/p>\n
According to data from the Indonesian National Air Carrier
\nAssociation (INACA), the country's airline industry is expected
\nto continue its recovery with demand for airline seats estimated
\nto grow by 10 percent this year to reach about 7.5 million
\npassengers from 6.89 million passengers.<\/p>\n
INACA predicted that local demand would continue to grow to
\n8.27 million passengers next year, and swell to over 10.4 million
\npassengers by 2004.<\/p>\n
The existing commercial airlines, state-owned Garuda Indonesia
\nand Merpati Nusantara, and private carriers Bouraq, Mandala and
\nDirgantara Air Service could no longer meet the demand after they
\nhad to reduce their operations to survive the economic crisis,
\nwhich started in late 1997.<\/p>\n
Total commercial flights have dropped to about 130 flights to
\n90 cities as at end of last year from 201 flights connecting 115
\ncities in 1997.<\/p>\n
Lion Airlines' director, David Lumbun, acknowledged there
\nwould be fierce competition but said he was upbeat his fleet
\nwould be able to compete and survive.<\/p>\n
\"Our company is expected to experience some losses during the
\nfirst two years of operation, but after that we will start
\nearning profits,\" he said.<\/p>\n
AWAIR's president, Rachmat Soebakir, said in order to avoid
\npossible overlapping of routes with the other airlines, AWAIR
\nwould focus on international routes in partnership with regional
\nairlines.<\/p>\n
\"We will make international destinations our main service,\" he
\nsaid, mentioning Taipei and Australia as the company's initial
\ninternational destinations.<\/p>\n
Indonesian Airlines' president, Rudy Setyopurnomo, said his
\ncompany would keep its operational costs efficient by focusing on
\nflight services and subcontracting others sectors such as ground
\nhandling, crew training, maintenance and catering to existing
\nairlines that provided such services.<\/p>\n
\"That way, we don't have to hire too many people, so we can
\ncut operational costs on personnel, maintenance, etc.,\" Rudy
\nsaid.<\/p>\n
However, the entrance of seven new airlines has not scared the
\nexisting airlines.<\/p>\n
Airline expert and founder of existing commercial airline
\nBouraq, Benny Rungkat, said the entrance of new airlines would
\nnot really affect the existing fleets.<\/p>\n
\"Of course, the entrance of seven new players will result in
\ntighter competition. But, with such a large territory, Indonesia
\nneeds more airline services,\" he said over the weekend.<\/p>\n
Merpati's president, Wahyu Hidayat, said: \"I don't see any
\nproblem with seven new airlines entering the market at once.\"<\/p>\n
Three of the new airlines, AWAIR, Bayu Air and Lion Airlines,
\nsaid they would start operating this month using 10 aircraft,
\nmost of which were of the large size Boeing.<\/p>\n
AWAIR was founded by Rachmat along with President Abdurrahman
\nWahid and Soewondo, the President's masseuse, who has been
\nmissing since being linked to a scandal involving Rp 35 billion
\n(US$4.3 million) of funds from the National Logistics Agency
\n(Bulog).<\/p>\n
Rachmat said Abdurrahman pulled out immediately after being
\nelected president in October, and Soewondo resigned later on.<\/p>\n
Pelita Air will start its scheduled flights to Yogyakarta,
\nSorong, Balikpapan and East Kalimantan next month, while
\nIndonesian Airlines is expected to fly to Medan, Surabaya and
\nother cities in August.<\/p>\n
The remaining two new airlines, Jatayu Air and Rusmindo
\nInternusa, have yet to announce their plans.<\/p>\n
According to Benny, 27 other local airlines are now in the
\nprocess of finalizing their business plan as new commercial or
\nchartered carriers.<\/p>\n
He predicted that at least 10 of the 27 new companies would be
\nready to enter the market by the end of next year.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/new-airlines-upbeat-despite-tought-competition-1447893297",
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