Merpati, Mandala not interested in no-frills
Merpati, Mandala not interested in no-frills
Fitri Wulandari, The Jakarta Post, Jakarta
Merpati Nusantara Airlines and Mandala Airlines say they have no
plans to enter the no-frills business due to the fact that in-
flight services are still a priority for local passengers.
"The consumers here are still 'spoiled'. When they fly, they
always ask for in-flight services, like meals," Yoyok Priyowiwoho
Merpati's manager for marketing analysis told The Jakarta Post on
Friday.
Ndan Kamandanu, commercial director of Mandala Airline
concurred, saying that "Indonesian passengers like to be
pampered".
He added that local passengers' behavior was different from
Europeans and Americans where no-frills flights and airlines have
thrived for a long time.
Europeans and Americans have developed a culture as travelers
where an affordable ticket price is a higher priority than in-
flight services.
"There hasn't been any market research to indicate whether
local passengers would show a similar trend. It is very important
to look at those countries and deeply understand consumer
behavior," Ndan said.
No-frills airlines are thriving in Asia and Australia. A no-
frills airline is an airline that offers low-cost tickets that
can cost as little as half the normal price. Due to their low
prices, they come without passenger in-flight services such as
meals, beverages or entertainment. They mainly serves shuttle
routes and point-to-point routes.
In order to offer cheap prices they use Internet sales to cut
commissions for travel agents, skipping big meals, charging for
snacks and operating only one type of aircraft.
Although still in their infancy, several airlines plan to hit
the regional market after booking success at home.
Such examples are Malaysian Air Asia and Australian Virgin
Blue. Experts say that no-frills airlines have the potential to
eat up traditional airlines.
In Indonesia, no-frills flights made their mark here a year
ago with Citilink, operated by Garuda. This year, another
incumbent carrier, Bouraq, also entered the business through its
subsidiary.
Further, Ndan said, considering the local market, Mandala will
continue to focus on fully-serviced flights.
"Our priority is to provide value-added services, convenience,
safety and accessibility for our customers," he said, adding that
an emphasis on value-added services and convenience has been
Mandala's key strategy in developing Mandala into a major player
in the domestic market.
Elsewhere, Yoyok added that the situation in the domestic
market was not favorable for the development of no-frills
airlines given the current political and economic situation.
"The main requirements to run a no-frills airline are very
low-priced tickets and controllable operating costs. It is very
hard to do that (control cost) here," Yoyok told The Jakarta
Post.
Yoyok pointed to the volatility of the rupiah against the U.S.
dollar as one area of uncertainty.
"Operating costs are pegged to the dollar, and it fluctuates
greatly. In Europe or the U.S. they don't have problems with
their exchange rate, so, it's controllable," he said.
Cutting reservations and passenger services would not have
much impact as they make up a small proportion of the operating
costs, Yoyok explained.
"Seventy-five percent of operating costs involves maintenance,
fuel and aircraft leasing. The rest is for reservations,
passenger services and ground handling," he said.
It is too risky to run a business when one cannot control the
operating costs.