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