Merpati takes `quiet' route to boost revenue

Merpati takes `quiet' route to boost revenue

M. Taufiqurrahman, The Jakarta Post, Jakarta

Reeling from stiff competition on busy routes, state-owned
domestic airlines Merpati Nusantara plans to concentrate on
flying to places that most other airlines consider unprofitable.

Merpati Nusantara president Hotasi Nababan said on Friday that
offering flights to Indonesia's remote regions had filled the
company's coffers with a high yield.

"We don't want to waste our money on routes that generate only
a small margin of profit. Merpati has to be smart by not flying
routes that are already plied by many airlines, as the profits
are just too low," he told The Jakarta Post.

Nababan dismissed speculation that flying to the country's
remote areas had largely contributed to the company's losses.

The domestic flag carrier asked the government on Tuesday to
provide up to Rp 200 billion (US$24 million) in a financial
bailout to improve its performance. In the first quarter of 2003,
Merpati posted a loss of Rp 40 billion, a huge drop from the Rp
43 billion in total profits in 2002.

By the end of 2002, Merpati's total debts stood at Rp 1
trillion, most of which is owed to the Indonesian Bank
Restructuring Agency (IBRA).

Nababan said that the profit gained from flying the quieter
routes had boosted Merpati's financial performance.

"Merpati has started flying the Pekanbaru-Singapore and Medan-
Dumai routes. Contrary to what most people believe, these routes
generate a handsome revenue for us," he said, referring to its
routes in the western part of the country.

To boost efficiency in plying pioneering routes in the central
and eastern parts of Indonesia, Merpati will in the near future
make Makassar, South Sulawesi, its operational hub.

"Merpati's strength will lie in flying routes in the central
and eastern part of the country," he said, adding that the
company would not entirely abandon its flight service in the
western part of Indonesia.

Separately, air transportation expert Dudi Soedibyo said that
Merpati's plan to move its operational hub from Jakarta to
Makassar was appropriate considering that there were already too
many airlines operating in western Indonesia.

He told the Post that Merpati should not throw itself into a
losing battle in which airlines lowered their airfares to rock-
bottom prices.

"Flying to Gorontalo in North Sulawesi might not have been a
good idea for airlines in the past, but as you can see now the
destination has turned out to be quite profitable," he said.

He said that Merpati's current woes could be attributed to
past government policies that had prevented it from becoming an
airline with a good performance.

"In the past, Merpati was forced to serve pioneering routes to
the country's remote regions, while busy routes were given to
airlines owned by the family and cronies of former president
Soeharto," he said.

Merpati had also been burdened with arbitrary government
policies, such as being obligated to purchase CN-235 aircraft
constructed by Dirgantara Indonesia, which was founded by then
technology minister B.J. Habibie.