Bali's Air Paradise to start flying to Seoul in July

Bali's Air Paradise to start flying to Seoul in July

Marian Carroll, Contributor, Denpasar, Bali

At a time when most international carriers are cutting flights,
Asia's newest airline is expanding into new markets, but its
owner has warned that growth will be limited without government
financial support.

Bali-based Air Paradise, which launched services to Australia
in February, is struggling to break even and is seeking tens of
millions of dollars in loan from state-owned banks to fund future
expansion.

The airline's expansion is critical to the recovery of Bali's
tourism-driven economy, argues owner Kadek Wiranatha.

"In another six months, if the situation in Bali has not
improved, a second bomb will explode: Uemployment," he said in an
interview.

"The Balinese cannot wait; we need transport to bring the
tourists here and for that we need help from the Indonesian
government."

The airline currently flies twice a week direct to Melbourne
and four times a week to Perth.

It is filling 70 percent of seats on average, but Kadek
expects this figure to rise to 85 percent during the seasonally
busier months of July and August.

To tap into the expected rise in tourists, Air Paradise has
leased a second aircraft and plans to start direct flights to
Seoul, South Korea, on July 16. It plans to lease a third
aircraft to start services to New Zealand and Japan in October.

However, beyond that, the airline's growth depends on the
government, Kadek said.

"It is impossible to expand to more destinations, apart from
those already in the pipeline, without help from a bank or
financial institution."

Air Paradise's entry into the global travel market was always
a risky bet, given the sharp drop in tourist numbers to Bali
following last October's bombing, but its potential success has
been further jeopardized by the global downturn in travel
resulting from fears over the spread of Severe Acute Respiratory
Syndrome (SARS).

"The bombing, the Iraq war and SARS were a big wake-up call
for the Balinese," said Kadek.

"Like it or not, we are 100 percent dependent on tourism for
our livelihood and we have to secure Bali as a tourist
destination. "That is why I set up Air Paradise. If we, as
Balinese, will not do it, who will do it for us?"

He said the Balinese could not depend on other carriers
because they only flew when demand was strong enough to safeguard
their profit margins.

"But not Air Paradise. We are suffering, but we must still
expand because we need to make sure there is enough capacity as
tourists start to return to Bali."

He estimates the airline will contribute around US$9 million
to Bali's coffers every month, if it brings in 200 passengers a
day to help fill the 50,000 hotel rooms across the island.

Kadek has already approached state-owned banks about the
possibility of a loan, but so far none has agreed to provide any
funding.

"I think they need to realize that we are not in competition
with any domestic airlines: We only fly overseas," he said.

If a bank loan is not forthcoming, Kadek is uncertain of how
he will raise the cash.

But he is adamant about one thing: He has no plans to sell his
100 percent ownership of Air Paradise to raise the cash. He will
only consider a partial or full sale once the airline is well
established.

"Perhaps, when we have five aircraft flying and we are
covering all of Bali's major tourist routes, then I may sell," he
said.