Asita raises $20m from savings scheme

Asita raises $20m from savings scheme

JAKARTA (JP): The Association of Indonesian Tour and Travel
Agencies (Asita) collected some Rp 43 billion (US$19.54 million)
as of last January from its "Plan Save 5" program, an arrangement
aimed at limiting discounted airfares for international flights.

Asita's chairman, Sri Mulyono Herlambang, told journalists on
Saturday that Asita had contributed 50 percent of the interest on
the funds, totaling $212,489, to the Indonesian Tourism Promotion
Board.

Plan Save 5, which has been boycotted by at least by 24 major
travel agencies, requires tour and travel agencies to deposit
five percentage points of the nine-percent commission they
receive from airlines in state-owned Bank Bumi Daya.

After two years, the agencies can withdraw their funds, but 50
percent of the interest on their deposits should be contributed
to the tourism promotion board.

The scheme, which took effect on March 1, 1994, will not allow
tour and travel agencies to provide discounts of more than seven
percent of the published prices of tickets for international
flights.

Heavy competition had previously forced tour and travel
agencies to offer discounts of seven to eight percentage points
of their commissions to costumers, leaving them with a mere one
to two percentage points in profits.

Mulyono noted that Plan Save 5 has been effective in
minimizing discounting wars. A number of countries, including
Singapore and the Philippines, will likely adopt such a scheme.

"Not only that, the International Air Transport Association
will most likely adopt such a scheme for its authorized agents in
a number of Latin American countries," Mulyono said.

Domestic

Asita's vice chairman, Indra K. Mahyudin, said the association
has signed an agreement with the Indonesia National Air Carriers
Association (Inaca) on the implementation of a similar scheme to
curb discounting of domestic airfares.

Asita groups some 1,600 tour and travel operators in the
country, while Inaca comprises six air carriers, which are Garuda
Indonesia, Merpati Nusantara Airlines, Mandala Airlines, Sempati
Air, Bouraq Airlines and Dirgantara Air.

Indra said the two associations have agreed to limit the
commissions for domestic flight tickets at seven percent, of
which two percentage points should be deposited in a designated
bank. "So, we might call it Plan Save 2."

He said that Asita and Inaca have not yet implemented the
agreement because "the government is still launching its campaign
against a discounting war. Just wait and see whether we need to
implement it or not." (rid)