INACA blasts government over new airlines

JAKARTA (JP): The Indonesian National Air Carriers Association (INACA) expressed concerns on Friday over the government's recent policy to award licenses to new scheduled airlines, describing it as an ill-timed move.

INACA chairman Soelarto Hadisoemarto said the country's scheduled airline industry was still in a frail condition after being severely hit by the economic crisis and that it did not urgently need new air carriers.

"There is no need so far to have more scheduled airlines, unless the new airlines are focusing on parts in eastern Indonesia. If that is the case, then we agree to it (the policy)," he said.

The government would have understood the real situation facing the airline industry if it had consulted INACA on the matter beforehand, he said, adding the previous government usually consulted with INACA on any plans to add or reduce the country's fleet capacity.

The Directorate General of Air Transportation of the Ministry of Communications recently awarded a license to newly established Indonesian Airlines Avipatria to operate scheduled flight service on 46 routes, most of which were previously served by the defunct Sempati Air.

The directorate also awarded a license to chartered airline Pelita Air Service, which is owned by state oil and gas company Pertamina, to operate as a scheduled airline. The directorate was expected to award this year another new air carrier, Mentari Airlines, a license to operate as a scheduled airline.

Indonesian Airlines said it would commence operation in January 2000, while Pelita and Mentari are expected to follow suit in the same year.

INACA secretary-general Bachrul Hakim said the existing scheduled airlines were still struggling to recover from the financial plight they had been facing since the economic crisis hit the country in mid-1997.

Bachrul, who is the commerce director of national airlines Garuda Indonesia, said the sharp depreciation of the rupiah to the U.S. dollar since late 1997 hurt the industry because most airlines' rupiah earnings were eaten up by overhead costs, over 80 percent of which were quoted in U.S. dollars.

"The condition is so bad that airlines will still suffer losses even when they fly in full capacity because the yields are not adequate to cover the aircraft lease fee alone," he said.

Indonesia has five scheduled airlines, namely state-owned Garuda and Merpati Nusantara Airlines and privately-owned Bouraq, Mandala and Dirgantara Air Service, in addition to 56 chartered air carriers.

The country's entire fleet serves 134 routes to over 90 destinations across the archipelago.

The five scheduled airlines are serving about 65 of the 134 total routes on an average load factor of 65 percent, which is higher than the 50 percent average recorded last year.

Sempati Air closed operations in June last year after shareholders could no longer afford to keep the airline afloat amid the prolonged crisis.

Bachrul said several scheduled airlines had decided to reduce flights and return some leased aircraft in a bid to cut costs and survive the crisis.

Merpati's fleet shrank from between 60 and 90 aircraft in the precrisis period to a current 29, while flight frequency dropped from 344 flights to 270.

Garuda has cut back 40 percent of its international flights, clipped the frequency of some domestic flights and trimmed down its fleet capacity from 58 units in 1997 to 42 this year.

Bachrul said the government should have cared more about the financial problems currently facing the existing scheduled airlines.

He said he found it acceptable if the government allowed new airlines to operate on routes which were left unserved following the bankruptcy of Sempati and the reductions of flights by other airlines.

"But we think the government should also help the existing airlines get out of their financial problems," he added.

The government announced a plan early this year to help the ailing local airline industry by allocating some $345 million, around $40 million of which was earmarked especially for chartered airline operators. The plan, however, has yet to be realized.

The government has predicted the number of airline passengers to reach 6.5 million this year. The estimate is lower than the 7.4 million passengers who flew in 1998 and 12 million in 1997. (cst)