Expansion continues despite stormy weather
Expansion continues despite stormy weather
Rudijanto, Contributor, Jakarta
The new general manager of Gulf Air in Indonesia, Hameed I
Hussain, would certainly not expect that his adjustment process
in Indonesia would be marked by the second Bali bombings in early
October that threatened to ruin the tourism and airline industry
in Indonesia's most popular destination.
Admitting to having received his new assignment in Indonesia
with great excitement, Hameed tried to maintain his optimism in
the country in spite of the unfortunate event that served as a
reminder of the greater challenge for him in leading Gulf Air's
operation in Indonesia.
"Gulf Air remains committed to Indonesia. We have just opened
an office in Surabaya and plan to open another one in Medan. We
also help transporting people from Bali to Singapore," says
Indian-born Hameed, who barely four months ago took control of
Gulf Air operations in Indonesia.
For Hameed, Indonesia is a country with a huge potential. Even
after the bombing in Bali, he believes that tourism will recover
as people will quickly forget the incident and come again to the
island.
In spite of Hameed's optimistic view about the potential of
Indonesia as a whole, the recent Bali bombings underline the risk
and uncertainty about the security situation in the worlds
biggest archipelago.
Aside from terrorist threats that continue to persist even
after the killing of one of two top fugitives in Indonesia, Dr.
Azahari bin Husin, Indonesia is also part of an area hot by avian
influenza. That is why not all international airlines are upbeat
about the country's prospects.
Japanese Airlines (JAL) has already reduced its flight
frequency and changed routings on the airline's Japan-Indonesia
flights since Oct. 30. The reason for this flight frequency
reduction is the significant decrease in passenger demand from
Japan resulting from the Bali terrorist bombings.
Bali-based airline Air Paradise announced the closure of its
operation last Wednesday. Air Paradise's chairman I Made Wiranata
admitted that his airline had been severely hurt by the recent
suicide bombings in Bali.
"I apologize to the people of Bali and players in tourism
industry here. Due to our condition, we have to stop the
operation of Air Paradise," said Wiranata in his Denpasar office.
Air Paradise's flights to Australia last Wednesday constituted
the last flight operated by the airline. Starting its operation
only in February 16, 2003, Air Paradise flew to Korea, Japan and
Australia from Bali. The airlines load factor declined by 80%
after the day of the bombings.
Australian Airlines chief executive Andrea Staines also
announced the suspension of the airline's flights to Bali from
Perth and Melbourne until January 29 due to the decrease in
demand for Bali. However, he expressed confidence that
Australians would soon return to Bali in increased numbers.
However, not all international airlines are ready to reduce
flights or depart from Indonesia. Aside from Gulf Air, another
optimistic airline that operates in Indonesia is Emirates.
"Indonesia is a very interesting market for Emirates. Of the
country' over 250 million people, only 10 percent to 15 percent
of them have ever traveled by air. If the number doubles, the
size of the market is already big," says John Rotikan, Emirates
area manager in Indonesia.
John's optimism is based on a solid growth in Emirates's
flight frequency. Operating with only three flights per week in
1992, Emirates steadily increased to ten times per week this year
with a load factor between 70 percent and 75 percent. The airline
is planning to increase its flight frequency to 14 times by the
second half of next year.
Another airline that is planning to increase its flight
frequency in Indonesia is Hong Kong-based Cathay Pacific
(Cathay). Currently, Cathay flies to three Indonesian
destinations, namely Jakarta, Surabaya and Denpasar. The airline
plans to increase flights to Bali.
Though Indonesia is not a huge market for Cathay, the
airline's CEO Philip NL Chen said the country has made a
significant contribution to Cathay's total revenue. That is why
the airline will continue to develop its market in Indonesia,
particularly its cargo market.
Qantas also stressed the importance of Indonesia as a market.
The airline flies to Jakarta and Bali, two important markets for
the Qantas Group. In addition, Qantas this year celebrated 55
years of flying to Indonesia.
Opportunities always stand side by side with high risk, not
only in Indonesia, but throughout the world. Since the attacks on
New York's twin towers, the airline industry has received
repeated blows.
John confirmed that the situation has not been easy for
international airlines operating not only in Indonesia but also
in other parts of the world. Under the current situation, he
believes that only airlines that have a strong determination to
exist will survive.
"The key is to lower operational costs without sacrificing
security and convenience. We are successful in controlling costs
and managing our fares at a competitive level. For instance, for
strong routes, such as Dubai-Bombay and Dubai-London, we do not
offer special rates," says John.
Terrorist attacks followed by the U.S.-led wars in Afghanistan
and Iraq have made people feel safer staying at home rather than
traveling to distant places. Terrorist bombs in Indonesia,
Pakistan, Egypt and even London have confirmed the view that the
world has become a dangerous place to travel.
In addition, the recent sharp rise in fuel prices, including
the price of aviation fuel, has undermined the profitability of
airlines. However, business has to go on for airlines. And long-
sighted major airlines understand this.
Major airlines, including Singapore Airlines, Qantas, Emirates
and Cathay, are continuing with their well-planned investment
programs to boost their operations.
The widely publicized arrival of the new Airbus 380 (A380)
with popular Hollywood actor John Travolta on board to mark
Qantas' 85th anniversary in Brisbane, Australia, highlighted
Qantas' order of A380s.
The A380 is the world's biggest aircraft and is capable of
carrying 555 passengers in a typical seating configuration,
including economy, business and first class. The aircraft is
designed for long-haul travel and can fly up to 15,000 kilometers
non-stop.
Qantas has 12 A380s on order, as well as options for a further
12. The first aircraft will be delivered in April 2007, with all
12 scheduled for delivery by June 2009. The A380 will be utilized
on Qantas's trans-Pacific and kangaroo routes to Los Angeles and
London.
The first 12 aircraft will enable the airline to fly at least
17 weekly services between Australia and Los Angeles and 14
weekly services between Australia and London via Singapore and
Hong Kong.
Just like Singapore Airlines and Qantas, Emirates has also
ordered the A380 with its total commitment to the "super jumbo"
reaching 45 aircraft. The airline's US$19 billion order for A380s
represented one of the largest in civil aviation history.
Still, the airline signed another US$9.7 billion contract with
Boeing for the purchase of 42 B777s on the opening day of Dubai
2005 -- the 9th International Aerospace Exhibition. Emirates'
decision to close the deal during these turbulent times is
considered a brave move in the airline industry.
The first aircraft is scheduled for delivery in 2007. In
addition, Emirates will also have purchase rights for 20 more
B777s. This new deal boosts Emirates current aircraft order book
to 132, with a total value of US$37.4 billion, and adds to the
airline's 23 B777-300ERs; 45 A380s, 20 A340-600s, and two A310Fs
pending delivery.
Though not as spectacular as Emirates, Cathay also revealed
its plan to increase its fleet to 100 aircraft by the end of
2006. Currently, the airline operates 96 aircraft, consisting of
A330, A340, B747 and B777.
The current situation both in Indonesia and around the world
poses a great challenge to airlines. A well-planned strategy and
long-range investment policy are the keys to airline survival and
growth during this turbulent time in the airline industry.