Garuda, Merpati to raise airfares by 40 percent

JAKARTA (JP): Passengers traveling on the state-owned Garuda Indonesia and Merpati Nusantara airlines will have to pay Rp 727,000 (US$66) for a ticket from Jakarta to Denpasar in Bali from next Tuesday following the announcement of an average 40 percent increase in the price of domestic airfares.

The airlines also announced that the following fares would take effect from next Tuesday (all departures from Jakarta): Rp 594,000 to Surabaya in East Java; Rp 413,000 to Yogyakarta; Rp 1.05 million to Medan in North Sumatra; Rp 412,000 to Surakarta in Central Java; Rp 738,000 to Batam in Riau; Rp 1.08 million to Ujungpandang in South Sulawesi; Rp 1.70 million to Manado in North Sulawesi; and Rp 2.47 million to Jayapura in Irian Jaya, the outermost destination served by the two airlines directly from Jakarta.

The increases apply only to economy class.

The Indonesian National Air Carriers Association (INACA) has decided to raise the basic tariff for air travel by 40 percent to Rp 753 per kilometer per seat after the government and the House of Representatives recently gave their seal of approval to the move. The basic tariff is currently set at Rp 538 per kilometer per seat.

Garuda, Merpati and the three other scheduled airlines currently operating in the country -- Bouraq, Mandala and Dirgantara Air Service -- will then raise the new fares by a further 14.5 percent on Dec. 1 to Rp 862 per kilometer per seat.

The new fares have been set assuming an exchange rate of Rp 10,600 per dollar, up from the rate of Rp 5,000 against the dollar which was used when the last round of fare increases were calculated.

The rupiah closed at 11,075 against the dollar on the spot market yesterday.

The country's airline operators have been under severe financial pressure since passenger numbers plummeted and their operating costs, most of which are quoted in U.S. dollars, rose sharply as a result of the monetary crisis.

Garuda Vice President Robert D. Waloni said yesterday that about 74 percent of the airline's operating expenses are quoted in dollars, including the costs associated with leasing and maintaining aircraft.

Robert said the fare increase would not be enough to boost the company's revenue but would help to reduce the loss which it is currently running at.

"We would break even with a fare of Rp 1,021 per kilometer per seat at an exchange rates of Rp 10,600 to the dollar," he told reporters.

Bouraq's commercial director Kelly Humardani said yesterday that his airline's monthly operating loss was currently running at a level of between Rp 4 billion and Rp 5 billion.

"We are operating at 45 percent of our normal capacity," Kelly said, adding that since December last year Bouraq had returned five of the nine aircraft which it had on lease agreements.

Garuda said earlier this month that it was suffering a daily operating loss of at least Rp 3 billion.

As part of its restructuring program, Garuda said yesterday that it had renegotiated $285 million of the $400 million in maturing foreign debt which it currently holds. The company also plans to sell off its maintenance unit, Garuda Maintenance Facility.

Garuda, like its local competitors, has reduced the frequency of domestic flights and slashed overseas routes to curb expenses.

In June, Sempati Air buckled under financial difficulties and shut down its operations, but it is now planning to open a route to Guangzhow in China, INACA said. (das)