Five domestic airlines plan joint operation

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)