New airline starts operations next year

New airline starts operations next year

JAKARTA (JP): Newly licensed air carrier Indonesian Airlines
Avipatria (IAA) will launch its first domestic flight early next
year to benefit from the country's economic recovery, an airline
executive said on Tuesday.

Airline president Rudy Setyopurnomo said the new airline would
start commercial operations in January 2000, serving 30
destinations across the country.

"This is a good business with a good market. We are optimistic
that we will be able to maintain an average load factor of at
least 60 percent in our first year of operations," he told The
Jakarta Post.

Rudy attributed the airline's optimism to an expectation that
the country's economy would significantly recover next year in
line with the improved political stability following the
establishment of the new government under President Abdurrahman
Wahid.

He said he expected the profit margin would be about five
percent of its total revenue during the first year of operations.

Indonesia currently has four regular airlines: state-owned
Garuda Indonesia and Merpati Nusantara Airlines and privately
owned Bouraq and Mandala Airlines. At least 53 charter airlines
serve 134 routes to over 90 destinations across the country.

The four airlines, which serve about 65 of the total routes,
have an average load factor of between 61 percent and 65 percent
in a nine-month period of the year.

Rudy said his airline would initially operate with ten Boeing
737-200s and focus its business on domestic destinations,
including those in Indonesia's eastern provinces.

"We are currently undergoing intensive negotiations with
overseas parties to lease the ten Boeings," he said, adding that
the airline was expected to spend up to US$125,000 in monthly
aircraft lease fees for one.

He said the airline was set up earlier this year with
investments totaling $40 million. It was awarded the license by
the Directorate General of Air Transportation of the Ministry of
Communications in September, he added.

In addition to Indonesian Airlines, the government has also
awarded a license to existing charter airline Pelita Air Service
to offer regularly scheduled services.

Another new carrier, Mentari Airlines, is expected to be
awarded a license this year. Pelita Air and Mentari are expected
to start operations some time next year.

Rudy said most destinations the airlines would fly to were
previously serviced by the now defunct Sempati Air.

Sempati Air used to serve 24 domestic flights and five
international flights to Kuala Lumpur and Penang in Malaysia,
Perth and Christmas Island in Australia, Singapore, Kaoshiung and
Taipei before it halted operations in June last year after
shareholders failed to keep it afloat.

Sempati operated a fleet of 25 leased aircraft and employed
3,500 workers at its peak in 1996, a time when it was labeled the
country's largest private air carrier.

Sempati was founded in 1989 and owned by Malaysian-Indonesian
joint venture Asian Aviation Inc. (40 percent), Indonesian Army's
PT Tri Usaha Bhakti (Truba) (25 percent), tycoon Bob Hasan (20
percent) and the Humpuss Group, controlled by the youngest son of
former president Soeharto, Hutomo Mandala Putra (15 percent).

Rudy refused to reveal the names of shareholders of the new
airline.

He said Indonesian Airlines would cooperate with Garuda
Indonesia for its air crew training, aircraft service and
maintenance, ground handling and catering service.

Rudy served in Garuda Indonesia as vice president for
corporate planning in 1992.

He said Indonesian Airlines was currently recruiting a
thousand people to fill positions of pilot, cabin attendant,
engineer and ground staff. (cst)