Awair to temporarily suspend flight operation

The Jakarta Post, Jakarta

Citing tight competition, the management of private aviation company PT Awair International announced it would temporarily suspend its commercial flight operations starting March 8.

The company said in a release on Wednesday that it would temporarily stop service on the Jakarta-Denpasar, Jakarta- Surabaya and Jakarta-Medan routes and would resume operations on June 1 possibly with new routes.

"Recent developments in the country's airline industry, especially the rapidly decreasing price due to competition, have made airline operations too burdensome economically and could threaten business survival," a company announcement stated.

The announcement marked the first operation suspension of a domestic airline since the government liberalized the sector in mid-2000, easing licenses for airline operation.

Several new airlines were started to compete with state-owned airlines Garuda Indonesia and Merpati Airlines, which have been for decades controlled by the country's aviation agency. The new companies are Pelita Air Service, Indonesian Airlines Avi Patria, Lion Mentari Air (Lion Airlines), Bayu Indonesia Air, Rusmindo Internusa Air and Jatayu Air.

The entry of new operators and the slowdown in the airline industry after Sept. 11 had led to intense competition among the airlines.

The government recently issued a decree allowing airlines to raise their ticket prices by up to 20 percent on certain routes.

But, the decree also scraps minimum prices for airline tickets, thus allowing airlines to cut their prices to attract customers.

The new regulation is expected to come into effect on March 1.

Some analysts have warned that the new regulation would further tighten competition in the country's airline industry and lead to bankruptcy for some of the airlines.