Five domestic airlines plan joint operation
JAKARTA (JP): Indonesia's five operating commercial airlines announced yesterday they plan to combine their resources and unite their domestic operations to survive the deepening economic crisis.
The chairman of the Indonesian National Air Carriers Association, Soelarto Hadisumarto, said the association proposed the plan to Minister of Communications Giri Suseno Hadihardjono during a meeting yesterday.
"We are going to work together -- all the existing airlines -- through an operation similar to a pooling system," Soelarto told reporters after the meeting.
"The aim is simply to survive," he added.
Soelarto said the scheme would be implemented soon, as all the airlines had approved the plan.
"If it can start this month, why not?"
There used to be six commercial airlines in the country until last week when Sempati Air stopped operating due to crippling financial hardships.
Sempati Air's shareholders include former president Soeharto's son youngest Hutomo Mandala Putra (15 percent) and long-term pal Mohammad "Bob" Hasan (20 percent).
The five remaining air carriers are state owned Garuda Indonesia, Garuda's subsidiary Merpati Nusantara, Bouraq Airlines, Mandala Airlines and Dirgantara Air Service.
Soelarto said the five airlines would form a consortium which would share the revenue of their operations.
The consortium would combine the fleets of the airlines, and allocate the domestic routes to the carriers.
A code-sharing system would be applied so that tickets could be sold at uniform prices and with the same incentives, he said.
The domestic air carriers have been in dire straits for months as the crisis continued to worsen this year.
Many analysts believe all the national private airlines will collapse soon if the Indonesian currency does not strengthen and the government does not help them.
Their operating costs are mainly in dollars, including aircraft leasing and fuel costs.
Unaffordable
The rupiah's 80 percent depreciation against the U.S. dollar since last July has made the jet leasing payments of their aircraft unaffordable.
At the same time, flights' load factors have slumped drastically, following people's declining purchasing power.
The airlines have had to return their aircraft and they are now burdened with matured leasing payments they could not pay.
Soelarto said the airlines' executives expressed concerns over the rupiah's value against the dollar, which has continued to weaken in the last few days.
Yesterday the rupiah closed at 14,000 to the dollar, compared to around 2,500 last June.
This week, State Minister of the Empowerment of State Enterprises Tanri Abeng said Garuda's total foreign debt stood at US$200 million, half of which was due to be repaid this year.
Tanri admitted "Garuda is in critical condition, so restructuring both on the management and financial sides is a matter of great urgency."
Tanri said Garuda would have a new president by Monday.
After being pressured by its employees, Garuda announced this week that it would sever cooperation with companies linked to Soeharto and return leased aircraft to ensure its survival. (das)