Local airlines not ready to operate under one flag

JAKARTA (JP): Communications Minister Giri Suseno Hadihardjono said yesterday Indonesia's airlines are still reluctant to operate under one flag despite their financial problems.

Giri said the country's five operating airlines still preferred to run individual operations instead of working jointly under one, Indonesia Airlines, flag.

The five air carriers announced in June a plan to combine their operations through a pooling scheme to survive the worsening financial hardship.

"The pooling system depends on the willingness of each airline. If they aren't willing to join, then we don't need to start it soon," he said after installing the ministry's new senior officials.

Under the proposed pooling system, the airlines -- state-owned Garuda Airlines and Merpati Nusantara, and Bouraq Airlines, Mandala Airlines and Dirgantara Air Service -- were due to combine fleets and allocate the domestic routes to each carrier and share the revenue.

Local airline operators have been under severe financial hardship as passenger numbers have declined drastically. The collapse of the rupiah by more than 80 percent since last July has more than tripled the spending for their dollar-denominated costs such as leasing and maintaining their aircraft.

Giri said most of the local airline operators' finances were at a critical point.

"Their revenues are much lower than their spending," he said.

Noting the demands from the tourism industry to allow foreign charter planes to enter the country as a way to boost the industry, Giri said the government remained cautious on the issue.

"Our task is to help tourism, but on the other hand, we cannot let it crush our domestic airlines," he said.

He said only one charter plane from Europe had so far asked permission to enter the country and that the ministry would check whether the plane would really carry tourists.

Garuda

Garuda President Robby Djohan said yesterday meetings last week with its foreign lessor, Airbus, in London had not gone well.

Robby said Airbus agreed at the meetings to lower the payment of the Airbus 330 aircraft to US$750,000 per month from $1.05 million.

However, Robby said this was still too high.

"Our income from the Airbus 330 is about $600,000 a month, we don't want to have a negative balance."

He said Garuda asked to reduce the payment to $550,000 per month for the first three years to allow the airline to recover in terms of market share, cash flow, profit and operations.

Garuda uses Airbus 330 planes on Australian and Asian routes. Robby said the planes are on a 12-year leasing term.

Robby said Garuda would also start negotiations with Boeing this month over the five Boeing 737-300, 737-400 and 737-500 aircraft it uses.

"The payments are very high, but I think we can get them reduced," he said.

The government has announced Garuda's foreign debts are currently $200 million.

At yesterday's ceremony, Giri installed Anwar Supriyadi as the ministry' new secretary-general, replacing Muchtarudin Siregar, and Agus Rudyanto Ruwadi as the director general of sea transportation, replacing Soentoro.

He also replaced Director General of Air Transportation Zainuddin Sikado with Soenaryo Yosopratomo and Head of the National Search and Rescue Agency Harjanto with Setyo Rahardjo. (das)