Adam Air plans to double Boeing 737 fleet

Adam Air plans to double Boeing 737 fleet

Arijit Ghosh, Bloomberg, Bangkok

Adam SkyConnection Airlines, an Indonesian budget carrier, aims to double its fleet as it plans to fly to international destinations such as Singapore and Australia next year, Chief Executive Adam Adhitya Suherman said.

The carrier, known as Adam Air, will double its fleet of Boeing Co. 737 aircraft to six by the end of this year and expects to expand it to 12 next year, Adhitya said. It flies to eight cities in Indonesia and also to Penang in Malaysia from the Indonesian city of Medan

"The domestic market is huge but we are looking to expand to Singapore and Perth," Adhitya said in an interview. Adam Air is partly owned by Agung Laksono, the speaker of the House of Representatives.

Adam Air wants a share of the air traffic to Bali, Indonesia's main tourist attraction. As many as 834,191 people visited Bali in the January-to-July period, 58 percent more than the same period last year. Indonesia expects tourist arrivals to the Southeast Asian nation to rise 16 percent to 5.1 million this year.

Discount carriers such as Malaysia's AirAsia Bhd, Singapore Airlines Ltd.'s Tiger Airways and Indonesia's Lion Air have mushroomed in Southeast Asia, a region with a combined population of 500 million people.

The Jakarta-based Adam Air plans to fly to Perth from Bali as well as to Singapore from Bandung by next year, Adhitya said.

The carrier said the six additional planes it will add to its fleet next year are Boeing 737s. A Boeing 737 can seat 110 to 189 passengers with a maximum range of 3,140 miles to 3,630 miles and costs between $44 million to $74 million, based on the catalog price.

"I see a good potential market to Denpasar, in Bali. Leisure travelers from Australia are always flying to Bali," Adhitya said.

Australian tourist arrivals to Indonesia is expected to rise 7 percent to 442,600 by 2006 from this year, according to the Pacific Asia Travel Association.

A bombing outside the Australian Embassy in Jakarta last month, which killed nine people, however, may still crimp tourist arrivals. Foreign travelers and investors have been asked to avoid Indonesia, with the U.S., Australia, the U.K. and Canada alerting their citizens about terrorist attacks. A bomb blast in 2002 in Bali killed 202 people, 88 of them Australians.

"A lot depends on the perception of security," said Peter Harbison, managing director of the Center for Asia Pacific Aviation in Sydney. Still, "Australian's aren't usually nervous travelers."

Adam Air, which sells about US$4 million of tickets a month, also expects an economic expansion in the country to boost sales. Indonesia's $208 billion economy is forecast to expand 4.8 percent this year and 5.4 percent in 2005, which would be its fastest pace in nine years.