RI domestic airlines on verge of collapse

RI domestic airlines on verge of collapse

SINGAPORE (AFP): Indonesia's domestic airlines are on the verge of collapse amid the economic turmoil caused by the rupiah's steep depreciation, an aviation journal reported yesterday.

Hadi Soemarto, president of the Indonesian National Air Carriers Association (INACA), said the four airlines -- Bouraq, DAS, Mandala and Sempati -- were in "serious danger" of shutting down due to huge losses.

"We all fear that they are going to stop operating if the monetary crisis goes on like this," Soemarto told Flight Daily News, a journal published in conjunction with the Asian Aerospace trade show here.

"The domestic airlines only earn rupiah and the rate of the rupiah is still going down even though the cost are based on U.S. dollars. It is a very bad situation," he was quoted as saying.

Soemarto held an emergency meeting with the Indonesian director-general of air communications, Zainuddin Sikado, in a bid to stave off the collapse, the journal said.

Indonesia is the worst hit by the regional currency crisis which has wreaked havoc in the region since mid-1997 and put the brakes on rapid economic growth. The rupiah has lost more than 70 percent of its value against the dollar.

In the interview with the journal late Tuesday, Soemarto ruled out a merger of Indonesian domestic airlines because their managements varied.

"But they have to work together or else they can all collapse. That will be very bad for everybody. People still need to fly," he said.

The airlines are seeking ways to postpone payments on leased aircraft until the financial crisis was resolved.

Soemarto said: "The biggest problem is they cannot afford to pay the leases for the aircraft. We hope that the aircraft owners are more understanding and allow us to reschedule some leases."

But he said there was no danger of Garuda Indonesia and Merpati collapsing because they were owned by government.