Domestic airlines expected to face stiff competition
Domestic airlines expected to face stiff competition
By I. Christianto
JAKARTA (JP): Domestic airlines have to prepare themselves for stiffer competition with foreign airlines as the government has invited foreign airlines to serve more destinations in the country in anticipation of heavy tourism by 2005.
Chairman of the Indonesian National Air Carriers Association, Soelarto Hadisoemarto, told The Jakarta Post last week that as compared with foreign airlines, domestic airlines had two major weaknesses -- the low rate of on-time schedules and the operation of aging fleets.
"On-time schedules are related to management. Many overseas airlines have successfully limited the rate of delayed and canceled flights. We also know that foreign airlines generally operate new aircraft," he said.
Since there will be many foreign airlines serving new destinations in Indonesia, domestic airlines would lose their market, he added.
Ansett of Australia, for instance, just started last week its new service linking Sydney and Jakarta after serving Denpasar in Bali since September 1993. Ansett plans to fly to Jakarta four times a week as part of its international expansion program, using Boeing 767-300 aircraft.
KLM of the Netherlands, British Airways, Germany's Lufthansa and Japan Airlines have also been invited to serve more destinations in Indonesia.
Meanwhile, one of the foreign airlines planning to fly to Indonesia is Japan Air System, which is scheduled in April to link Nagoya in Japan and Manado in North Sulawesi and Denpasar.
Director General of Air Transportation Zainuddin Sikado said recently that he would meet in March and April with his counterpart from Hong Kong to discuss the plan of Dragon Air of Hong Kong to serve Indonesia.
"Based on a bilateral agreement with Hong Kong, Sempati and Merpati of Indonesia have been licensed to serve Hong Kong," he said.
The Hong Kong-Indonesia route is currently served by Cathay Pacific of Hong Kong and Garuda Indonesia.
Sikado also said that Asiana of South Korea also plans to serve Indonesia.
There are six scheduled airlines in Indonesia: Sempati Air, Garuda Indonesia, Merpati Nusantara Airlines, Mandala Airlines, Bouraq Airlines and Dirgantara Air Service.
Garuda is presently the country's only flag carrier in international routes. The carrier, which serves 35 international destinations, operates 60 aircraft.
Out of Garuda's total fleet, the newest ones are only three Boeing 747-400s.
Meanwhile, Sempati Air, which serves domestic routes, flies several regional flights to serve Kuala Lumpur and Penang in Malaysia, Singapore, Taipei in Taiwan, Perth in Australia and Christmas Island. The carrier operates more than 25 aircraft, including new Fokker 70s.
Meanwhile, Merpati (with its fleet of more than 100 aircraft), Bouraq (with 25 airplanes) and Mandala (with 10 airplanes) do not have any new aircraft.
In spite of the condition, the government has announced that, except Dirgantara, all of the domestic scheduled airlines would be permitted to fly abroad in 1998. The overseas routes opened to the domestic airlines include countries in Europe, Africa, Latin America and the Asia-Pacific region.
American aircraft manufacturer Boeing said that airlines in Asia are expected to acquire about 3,000 planes valued at US$245 billion by 2010, making the Asia-Pacific region the world's largest market for commercial aircraft.
However, domestic airlines will face difficulties in operating new aircraft due to their financial condition. Like Soelarto advised, the only thing the airlines may enhance is services, including reducing the rate of delayed and canceled flights.
BDW, an Australia-based aviation analyst publication, meanwhile, reiterated that this year will be the year for future key airline partnerships to be founded or entrenched. The report said that long-term alliance strategy will be at least as important as market decision this year.
Airlines which enter 1997 without a sound strategic foundation will be unlikely to survive the medium term, the publication said.