State airlines may get subsidy for quiet routes
JAKARTA (JP): The government plans to subsidize state airlines to allow them to continue flying unprofitable routes abandoned by private airlines due to the current monetary crisis, a government official said yesterday.
Director General of Air Communications Zainuddin Sikado said the planned subsidy was of national importance to provide a fast means of transportation to connect the vast archipelago.
"The government is currently studying how much of a subsidy will be given to continue the services," Zainuddin said after addressing a seminar on air safety.
He acknowledged that the monetary crisis, in which the value of the rupiah has been slashed by about 70 percent since early July, has dealt a big a blow to the country's ailing industry, but he said the continuation of the services was important.
He said the crisis had forced both state and private airlines to abandon less profitable routes, especially to eastern Indonesia.
"Flights on these routes have dropped by more than 50 percent," he said, adding that even state airlines which normally offered daily flights on some of the routes had to restructure their schedules to twice-weekly services.
He expects, however, that Garuda and Merpati will continue servicing less profitable and low in demand routes, at least servicing Jakarta-provincial capital routes.
He gave no indication of what would happen if there was no foreseeable solution to the monetary crisis, but pointed out that private airlines would stop flying to many parts of the country.
Indonesia has six scheduled airlines: state companies Garuda and Merpati, and private airlines Sempati, Bouraq, Mandala and Dirgantara Air Service.
Sikado also said the minister of communications would hold discussions with the country's Economic and Monetary Resilience Council on domestic airlines' request for a postponement in their payments for their leased aircraft.
The council was formed by President Soeharto in January to deal with the economic crisis.
The Indonesian Air Carriers Association (INACA) earlier called for the postponement and urged the government to play mediator between the creditors and the airlines.
"This is a big problem that should receive immediate attention. We are currently collecting the necessary data, like monthly installment figures," Sikado said, adding that the situation faced by the airlines is considered a force majeure, a crisis beyond the control of anyone.
Five of Indonesia's six airlines are paying off their airplanes. Only the small Dirgantara Air Service outright owns its planes. Sempati is believed to own six of its 21 planes, while Merpati is paying off 54 of its 90 aircraft.
Bouraq reportedly made arrangements to return two of its nine Boeing 737 jets to Indigo, a Sweden lessor, by the end of this month.
The monthly installment for a Boeing 737 is more than US$100,000, while domestic monthly revenue only averages $4,000.
Indonesia has been the hardest hit by the region's monetary crisis, which started in Thailand in July. The rupiah sank to its lowest level of Rp 17,000 per U.S. dollar in January, compared to its precrisis level of Rp 2,450 in July. The Indonesian currency gained ground yesterday to break through 9,000 against the U.S. dollar.
Sikado also indicated that the monetary crisis was one reason for the delay in the implementation of a new satellite-based system for communications, navigation and surveillance/air traffic management, which was scheduled to be implemented this year. It has been postponed to 2000.
He said today's traffic at domestic airports could still be handled by the old system, pointing out that the daily traffic at Soekarno-Hatta International Airport, the country's busiest airport, was 150 flights.
"But we have to anticipate the traffic in the next two to three years," he said, adding that yesterday's seminar was part of preparations in applying the new navigation technology.
The seminar was sponsored by Japan International Cooperation Agency. Japan is a leading country in developing navigation technology. (08)