Local airlines ready to compete with foreign rivals

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.