Seven new carriers for Indonesian domestic market - Brief Article

Airline Industry Information, June 9, 2000

AIRLINE INDUSTRY INFORMATION-(C)1997-2000 M2 COMMUNICATIONS LTD

Indonesia will see seven new airlines start up this year according to the Indonesian National Air Carrier's Association (INACA).

The new airlines will arrive in a market that has been suffering from an economic crisis and will mainly operate on domestic routes.

The carriers include Indonesian Airlines, Pelita Air Service, AIRWAGON International, Lion Mentari Air, Bayu Indonesia Air, Rusmindo Internusa Air and Jatayu Air.

The president of Indonesian Airlines told Dow Jones News that he was not too worried that established airlines like Garuda Indonesia and Merpati Nusantara were struggling because he believes that 'they are struggling because they are not efficient.'

The Centre for Asia Pacific Aviation, an Australia-based think tank, has said however that the potential for market growth is definitely there, but that there might not be enough potential for seven new carriers.

In other news, INACA has indicated that it will be proposing a 20% increase in domestic airfares in order to recoup rising operating costs as the local currency (rupiah) falls.

The increase would see airfares increase from USD0.09 to USD0.11 per seat per kilometre.

INACA has also advised the Indonesian government to allow the market to dictate the prices airlines charge as the organisation believes that the current system does not work because some carriers sell their tickets below the official price anyway according to AsiaPulse.

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