'New airlines must improve services to weather competition'

'New airlines must improve services to weather competition'

Fitri Wulandari, The Jakarta Post, Jakarta

New airlines will not be able to rely on a low-price ticket
policy without improving their services to weather the tight
competition in the domestic market, experts said.

"They won't survive by just offering low-price tickets.
They'll have to improve their services, as well. With good
services, they can attract more customers," Dudi Sudibyo, an
industry expert told The Jakarta Post Monday.

Without improved services, Dudi said, it would be difficult
for them to compete with the old players in the industry, which
had gathered loyal passengers over the decades.

Good service, he said, could be as simple as delivering a
ticket to passenger's home, transporting them to the airport or
making sure that passengers can easily get tickets.

Nurwulan Handayani, the head of the commercial department at
newcomer Star Air agreed with Dudi, citing the behavior of local
consumers, who are still concerned with the services offered in
transportation.

"From our experience, passenger services, even as simple as an
in-flight meal, can persuade passengers to continue using the
same airline," she said.

Following the liberalization of the sector two years ago,
there are now 16 scheduled airlines flying in Indonesia,
including six well-established players, Garuda, Mandala, Merpati,
Deraya Air Service, Bouraq and Pelita Air Service.

Many of the new airlines only provide economy class to cater
for passengers from the middle-income bracket. They offer
affordable tickets, often almost as low as executive class on
trains and ships.

Among the newcomers, there are two fully-fledged no-frills
airlines, namely Garuda's Citilink and Bouraq's Bali Air.

A no-frills airline is an airline that offers low-cost tickets
that can cost as little as half the normal price. The low prices
charged mean that they come without passenger services such as
meals, beverages or entertainment. They mainly serve short-haul
routes.

The new airlines and their low-price tickets have also
increased the volume of domestic air passengers to almost pre-
crisis levels.

This year, it is estimated that the number of domestic air
passengers will reach around 11.4 million, up dramatically from
9.4 million in 2001.

This figure is an upward revision of the government's initial
projection of 10.4 million. With this projection, optimism is
high that passenger volumes will come back to pre-crisis level by
2003.

However, questions have been raised regarding services as the
low-price policy is seen as being the result of a full-scale
price war, which means that the new airlines keep operational
cost as low as possible to compensate for lower prices.

Meanwhile, Kelly Humardi, commercial director at no-frills
airline Bali Air said that based on a company survey, passengers
put a high priority on punctuality and low prices as their main
reasons to fly by air.

"Services are placed down the list. We repeated the survey at
our destinations and the result was the same. Passengers are more
concerned about flying on time and at low cost," he said.

Bali Air does not provide additional services such as a
special lounge with hot meals, newspapers or magazines. And like
no-frills in the U.S. and Europe, Bali Air does not provide
inflight snack nor meals.

However, Dudi said it is still necessary for no-frills
airlines to improve their services. For example, he said, by
providing transportation for passengers to go to the airport.

Dudi suggested that the new airlines stop their price war and
adopt a "normal price" policy while improving their services, if
they wanted to survive the tight competition.

An airline passenger, 25-year old Chadijah, said she would
think twice about flying with the new airlines again after
experiencing bad services.

Chadijah had to postpone her flight by one day and spend a
night in an down-market hotel after she could not a get a seat
even though she had booked the ticket two weeks in advance.

"I don't want to fly with a new airline anymore. They have
lousy service," she told The Jakarta Post, adding that she had
originally chosen a new airline because of the low ticket price.