New airlines propel domestic market to precrisis level
Fitri Wulandari, The Jakarta Post, Jakarta
The number of domestic airline passengers is close to resuming its 1998 pre-crisis level, as new airlines offer travelers a wider option of routes with low-priced tickets.
By the end of this year, around 11.4 million people will have traveled by air on domestic routes, a leap from 9.4 million last year. The estimate is an upward revision from the government's 2002 growth assumption of 10.4 million people.
Air transportation director at the Ministry of Transportation, Santoso Eddie Wibowo, told The Jakarta Post that the volume of air passengers had grown significantly over the past two years, which, in turn, indicated a parallel growth in the market.
He expressed confidence that by next year, the number of air passengers will have returned to its 1998 pre-crisis level of 13.4 million.
The 1997 economic crisis sapped airline passengers as people refrained from traveling, and tickets became more expensive. A sharp plunge in the rupiah against the U.S. dollar inflated the airlines' operation costs, many of which are pegged to the dollar.
The crisis slashed the number of air passengers by more than half, from 13.4 million in 1997 to 6.2 million in 1998. The number of passengers grew to 7.5 million people in the following year and maintained the same figure in 2000.
Although the number of domestic air passengers grew only slightly, new airlines sprouted up across the country. In 1998, six airlines operated 106 aircrafts; today, there are 15 airlines with a total of 153 aircrafts.
Distancing themselves from national flagcarrier Garuda Indonesia, the newcomers have entered the market with new routes serving faraway islands and cheap tickets to lure travelers.
Frequent flyer Ekaputra, 31, said the presence of low-cost airlines was helpful, especially since he had to travel a lot.
"I can travel faster, the aircraft is comfortable...and it's cheaper than traveling by train. I don't mind flying without an inflight service. Besides, it's only a short trip," he told the Post.
"We focus on selling economy class tickets, as we want to promote to the public that they can enjoy faster, more comfortable, and yet affordable transportation," said Rinarsa Paulus, marketing and sales manager of the recently launched Bali Air.
Launched in Sept. 2002, the no-frills Bali Air offers its passengers cheap tickets which are sold without inflight services such as meals or snacks.
Another newcomer, Star Air, is also enjoying growth in its passengers by targeting price-conscious travelers.
Star Air, flying since July 2001, operates four Boeing 737-200 aircrafts and serves 22 domestic destinations.
New airlines like Bali Air and Star Air are eating into the market shares of state-owned train operator KAI and domestic passenger ships.
Travelers can fly from Jakarta to Surabaya in one and a half hours on Bali Air, compared to the nine hours it takes a KAI Argo Bromo Anggrek executive train to the same destination. The huge difference in travel time costs travelers just Rp 28,000 (about US$3.1): A Jakarta-Surabaya Bali Air ticket sells for Rp 308,000, compared with Rp 280,000 for a KAI Argo Bromo Anggrek executive train ticket.
Star Air's Jakarta-Medan ticket costs Rp 817,000 for a two- hour flight, whereas the same trip costs Rp 807,500 by ship, but would take nearly two days' travel.
"We've become the main competitors for transportation companies operating on land and sea," said the head of Star Air's commercial department, Nurwulan Handayani.
She said the airline enjoyed an average load factor of 80 percent per flight, which represents a ratio of passengers versus available seats.
At Bali Air, Rinarsa said, the average load factor was 70 percent.
Garuda, too, realizes the potential of low-priced tickets with its city link service. Yet, on some routes like Jakarta to Surabaya or to Yogyakarta, tickets on either end of the pricing range are snapped up by travelers.
Meanwhile, Nurwulan and Rinarsa dismissed concerns that the new airlines were looking to earn their profit margins at the expense of safety measures.
As passenger numbers have yet to regain pre-crisis levels, both agreed that there was still enough room for all to expand.
Rinarsa said Bali Air planned to add new routes and buy one aircraft every six months to expand its fleet from three to 14 planes.
Star Air's Nurwulan said the airline planned to buy two more airlines and expand its operations to serve regional routes to raise its U.S.-dollar revenues.
New airlines mainly serving Java, Sumatra, and Kalimantan
1. PT Airmark Indonesia Aviation, 2. PT Bali International Air Service, 3. PT Bayu Indonesia Air, 4. PT Indonesia Airlines Patria, 5. PT Jatayu Gelang Sejahtera, 6. PT Kartika Airlines, 7. PT Lion Mentari Airlines, 8. PT Metro Batavia, 9. PT Star Air, 10. PT Republic Express (cargo), 11. PT Seulawah NAD Air
source: Ministry of Transportation