'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.