Adam Air to seek Singapore listing in 2007: President
Adam Air to seek Singapore listing in 2007: President
Abdul Hadhi, Dow Jones/Singapore
Indonesian airline Adam SkyConnection Airlines (Adam Air) intends to seek a listing in Singapore sometime in 2007 after making the city-state a second hub for its operations, its President Adam Adhitya Suherman told Dow Jones Newswires late on Wednesday.
"We intend to go for an initial public offer in 2007, probably in Singapore. Our family used to do stockbroking and we believe that is the way to go," Suherman said in an interview after attending an aviation industry conference held in Singapore.
Ahead of the listing, the airline intends to make Singapore its second hub and introduce flights from the city-state to other parts of the region such as Kuala Lumpur, Bangkok, and to Indian cities such as Chennai and Bangalore.
"Singapore has given Indonesia fifth freedom rights and we can make use of that to add new destinations," Suherman said.
Fifth freedom rights allow an airline to take passengers to one destination where more passengers can be picked up before flying on to another location.
For example, Adam Air can fly passengers to Singapore and then pick up new passengers to fly to another city.
Routing flights through Singapore in this way would allow Adam Air to exploit the city-state's status as a travel hub with its large numbers of potential passengers, either in transit or who are starting their journey there.
Regional rivals such as Singapore Airlines' associate Tiger Airways and Malaysia's AirAsia bhd. are already looking at using Manila as a second hub to mount flights to Macau and southern China to expand their network.
Ahead of such plans, the airline -- which calls itself a boutique airline and not a low cost carrier (LCC) as it offers refreshments and assigned seating -- will start daily flights between Jakarta and Singapore on Friday.
The plans are ambitious but Adam Air, which started commercial flights in December 2003, has shown that it's capable, Suherman said.
While budget airlines, which are closest in style to Adam Air's business model, take around three years to just break-even, Suherman said Adam Air turned in a profit in its first year.
He won't say how much it made or how much growth it expects to see in its second year, except that the airline's fleet grew from two planes to 19 planes currently and load factors are at 80 percent-85 percent.
Load factors are a measure of how many passenger seats and cargo space an airline can fill.
The airline competes domestically with Lion Air, Citilink and AirAsia associate PT AWAIR, and targets the middle segment between the LCCs and legacy airlines such as national carrier Garuda Indonesia.
"We have to fight with over 20 airlines serving the same routes. Airlines have to adjust their model according to what the market likes," Suherman said, explaining why Adam Air offers a bit more than the LCC model.
Using that strategy, the airline aims to carry 10 million passengers by end-2006 and gain a 30 percent share of the domestic market.
Suherman didn't say what the airline's current market share was.
New destinations will add to passenger growth.
After Singapore, flights from Jakarta to Kuala Lumpur and Bangkok are expected to start early next year. Flights from Bali to Perth have been delayed somewhat after the recent bomb blasts on the Indonesian island, Suherman said.
Adam Air is assessing the impact on Australian tourist arrivals in Bali but expects to commence flights next year.
The airline currently flies to 19 destinations, including one overseas destination -- Penang. Its busiest routes are Jakarta to Medan and Jakarta to Surabaya.