We see great potential in Indonesia travel market: Valuair CEO
We see great potential in Indonesia travel market: Valuair CEO
The Jakarta Post, Jakarta
Singapore-based airline Valuair launched its second service to
Jakarta recently at a time when the airline industry in the
region faces surging fuel costs and cut-throat competition that
threaten bottom-lines. The airline now has two aircraft and also
flies to Hong Kong and Bangkok. The Jakarta Post's Fitri
Wulandari talks to Valuair CEO Sim Kay about the company's plans
for expansion and prospects in the Indonesian market.
Question: What was the main reason for increasing flights to
Indonesia?
The main reason is to give greater convenience to customers who
enjoy Valuair's service. One flight is not enough to give
Indonesian travelers the chance to go to Singapore and come back
on the same day. The Jakarta businessmen who travel in the
morning would like to fly back in the evening.
Secondly, we are happy with a recent development, the
(Indonesian) government's plan to do away with the departure tax.
Because of this, we think there will be more people flying with
us in the future.
Thirdly, we think Indonesian passengers like our service
because it is enjoyable and refreshing. We are very strict with
our safety standards. We give passengers not only a safe and
reliable flight, but also an enjoyable one.
Q: How do you see the Indonesian market?
I think there is great potential there. Singapore is a shopping
center for Indonesians and many Indonesians have relatives and
friends in Singapore. In addition, there are many business
opportunities because many Singaporeans and Indonesians travel
between the two countries. It is like taking a bus going to
Jakarta now.
There is also a good relationship between the two governments,
and the people of Singapore and Indonesia. Moreover, Indonesia's
economy is slowly improving. We see great potential for our
airline there. At present, we are carrying an average of about 70
passengers a flight, or about a 50-percent load factor.
Q: What market segments do you target?
Valuair is not like other fully serviced airlines or low-cost
carriers, we are in between. We provide food and beverages, the
same as fully serviced carriers, however, we charge lower fares
than full-serviced airlines, but higher ones than low-cost
carriers. So we give good value for money.
We are targeting several market segments, business travelers
and those visiting friends and relatives. And also young people
who want to enjoy the interesting experience that Singapore has
to offer.
Q: How do you make the service profitable for you but not too
costly for your customers?
Many small airlines are able to sell fares lower than the big
carriers because they manage to keep costs down. We don't cut
costs on safety and maintenance -- we spend most of our money on
that.
However, we do use less staff. Some airlines have 10
stewardesses on each plane, but we only have four. But they are
four very charming, lively stewardesses. Our staff work harder
and they are more productive. We multitask them -- we don't have
one worker dedicated to doing one job. We only have 230 employees
in total.
We also use Internet booking because it is very cheap. We work
with travel agents but we don't pay them (as much as other
airlines) and they still support us. That's why we can make
money.
Q: What are your expansion plans?
We have only two aircraft at the moment. In November, we are
going to buy another two because we are planning services to
Perth and Shanghai. Next year, we will lease another smaller
plane and two large ones. We plan eventually to fly to Japan,
Sydney and Melbourne.
Q: How much do you plan to invest in the expansion?
Since we will be leasing many of our planes, there is not much
investment needed. Much of the money goes into maintenance, fuel
and staff. It is hard to give a range on that.
How do you cope with surging oil prices?
As we are a small airline, we don't use that much oil. Fuel only
makes up 20 percent of our costs. That is because our current
destinations are within one to two hours reach. In other big
airlines, fuel costs can be up to 25 to 28 percent. We have a
small surcharge about S$5 on our fares. Other people charge more.
Fuel is not a major cost to us. We are continuing to operate as
normal.
Q: What is your strategy to win competition?
We provide quality services, friendly crews and charge low
prices. There are many such (similar) airlines in the world. We
are No. 2 (for our class) in Singapore but we will work harder to
improve our position.