No-frills airlines boost number of air passengers

No-frills airlines boost number of air passengers

Sari P. Setiogi, The Jakarta Post, Singapore

In the last three years, Indonesian skies have seen a rising
number of new airlines providing much cheaper fares. This has
been one of the main reasons for a surge in the number of
passengers in the past couple of years.

According to the Directorate General of Air Transportation at
the Ministry of Communications, the number of passengers flying
domestic routes in 1999 dropped to 6.36 million due to the
country's economic crisis. But in 2001, the figure grew to 9.17
million, and to 12.33 million in 2002. This year, the number is
estimated to jump to 15.88 million -- about 150 percent growth in
three years.

These new airlines are mostly categorized as no-frills
airlines, in which fly people in a single-class cabin, there is
no food, drinks or inflight services provided, which are often
taken for granted on established airlines.

However, some no-frill airlines such as Lion Air still offer
free food and drinks and a business class -- limited to eight
passengers -- at the price of a no-frills airline.

Lion Air president Rusdi Kirana told The Jakarta Post that
even though it offered tickets about 75 percent cheaper than
other airlines, his company was still profitable.

He said there was something wrong with existing airlines that
charged full prices and still made losses.

Lion Air at the moment offers return tickets from Jakarta to
Menado for only Rp 600,000 (US$70.59), while Garuda charges Rp 2
million.

Rusdi said the lower price had encouraged more people to fly.

"More people are flying but also the frequency is increasing.
If during the old days, let's say, someone could only afford to
fly once a year, maybe now people can make it five times," he
said.

Despite the fact the established airlines were suffering from
the global economic slowdown, no-frills airlines had been
enjoying a relatively healthy period.

Even after the Sept. 11 attacks in the United States, some of
these airlines were making profits close to 20 percent of
revenues.

These no-frill airlines might be a good, new hope for the
sinking airline industry. All of the aviation experts at the
recent Asia Pacific Regional Aviation (ARA) conference in
Singapore concluded that no-frills airlines could be the future
of the industry.

They acknowledged that air travel was shifting from a luxury
good to mass-market commodity.

Meanwhile, Tony Fernandes, chief executive officer of
Malaysian no-frills airline AirAsia told The Jakarta Post on the
sidelines of the conference that his airline could offer ticket
prices up to 90 percent lower than those offered by Malaysian
Airlines.

AirAsia sells tickets starting from Rp 4,000 (US$0.50) for its
Kuala Lumpur-Penang route (but this is applied only to a very
limited number of seats).

In Australia, Virgin Blue is forcing Qantas to also offer a
no-frills service.

Virgin Blue -- with operating costs up to 30 percent lower
than Qantas -- at the moment is serving 37 routes and controls 22
percent of the total domestic market.

Virgin Blue spokesman David Huttner, during the ARA
conference, said that while charging very little, his airline
could still offer free food, music and lounges at the airports
for their passengers.

However, the low price sometimes made some people raise
questions about maintenance and safety aspects.

Rusdi said Lion Air spent about 30 percent of its budget on
maintenance. "We give the maintenance to the Italian Alitalia,
Danish SAS and Switzerland's SR Technique. We send our
technicians to get training there," he said.

Separately, public relations manager Hasyim A. Alhabsi told
the Post that there were several safety-related aspects in
airlines industry that were not related to ticket prices, such as
the international standards of aviation, issued by the Federal
Aviation Administration (FAA) and International Civil Aviation
Organization (ICAO); as well as the national license issued by
the Directorate of Air Safety Certification.

Airlines operators in Indonesia

Operator Capacity Number of Aircraft

1. Garuda Indonesia 8,126 52

2. Lion Air 3,358 23

3. Merpati 2,491 40

4. Mandala 1,324 13

5. Batavia 1,013 8

6. Bouraq 907 10

7. Pelita 720 8

8. Jatayu 653 5

9. Bali Air 477 6

10. Star Air 472 4

11. Air Paradise 460 2

12. Kartika 246 2

13. DAS 235 15

14. Trigana Air 130 3

15. Riau Airlines 50 1

source: The Ministry of Communications