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.