Local airlines ready to compete with foreign rivals

Dewi Santoso, The Jakarta Post, Jakarta

The country's airline operators expect turbulence ahead as competition intensifies with a rising number of foreign low-cost airlines flying into domestic skies.

But local airlines claim they are ready to compete. For now.

Garuda Indonesia's corporate communications vice president Pujobroto said the flagship carrier would take up the challenge posed by foreign rivals.

"We don't feel threatened by the incoming (low cost) foreign airlines as we can offer lower fares with more flight schedules so that passengers will have the flexibility to choose," Pujo said over the weekend.

Beginning April 10, Malaysian carrier Asia Air will start to link Jakarta with Johor Baru at a price of Rp 99,900 (US$11.75). Then, on April 12, it will open a route connecting Bandung with Kuala Lumpur at Rp 149,999. On April 15, it will provide direct flights from Surabaya to Kuala Lumpur at Rp 299,999.

Besides Asia Air, two other airlines -- Tiger Air of Singapore and Virgin Blue of Australia -- are reportedly planning to enter the competition, followed by a Thai carrier.

Pujo said to ensure healthy passenger volumes, ahead of the increasing competition, his company planned to add more flights to Singapore and Kuala Lumpur, and to reopen previously closed routes, including Jakarta to Ho Chi Minh City, Jakarta to Beijing and Jakarta to Shanghai.

With a total of 8.16 million passengers last year, Garuda expected to see an increase in the market by between 20 percent and 30 percent this year, he said.

Local no-frills Lion Mentari Airline (Lion Air) public relations manager Hasyim Arsal Alhabsi also played down the impact of foreign competitors on the market, saying their addition would not affect Lion Air's business, which was already offering lower fares than other airlines.

"We'll stick to our principle: How low can you go? And we believe that our fares will stay lower than those of other airlines," said Hasyim.

With four new flights to India, Australia, Korea and Japan scheduled to open this year, he expected Lion's passengers this year would increase to between 500,000 and 700,000 per month from last year's 500,000 per month.

Adam Sky Connection Airlines (Adam Air) public relations head Leo Nababan expressed the same optimism, saying his company, a new player in the industry, was ready to compete with foreign airlines -- as long as the competition was healthy.

"We're entering an era of globalization so of course we welcome (foreign competitors)," he said.

Adam Air was established in October last year and started its operation in December. It currently offers six domestic routes, including Medan, Denpasar and Balikpapan; and one international route from Jakarta to Penang, Malaysia, with a transit in Medan.

Leo said that with around 300,000 passengers per month, the load factor of Adam Air was above 95 percent. For this year, the company would aim for the same total.

Minister of Communications Agum Gumelar said the foreign airlines would make the industry more competitive.

"We should not be surprised by foreign competitors with their low-fares concepts, as we anticipated this two years ago," he said as quoted by Antara.

Local airlines that have implemented the budget-travel concept are Lion Air and Garuda Indonesia through its City Link service.

According to data from the Ministry of Communications, the low-cost concept increased the number of domestic passengers to 16.5 million in 2003, from 12.3 million in 2002. In 2004, the number is predicted to surge to 20 million.

Indonesia until recently had 27 licensed airline carriers, but four -- PT Bayu Indonesia (Bayu Air); PT Seulawah Air; PT Air Wagon International (AW Air); and PT Airmark Indonesia Aviation -- have stopped operating, most during last year.