Jakarta(AsiaNews/Agencies) – Air traffic is growing by leaps and bounds inIndonesia, a country with 235 million people spread over more than 17,000 islands across a distance of5,000 kilometres. But growth means greater safety challenges. Last January 1’s air crash is neither the first, nor the worst accident in the recent history of the country’s aviation industry.
Some thirty different domestic carriers, using nearly 450 airports with profound differences from one another, are competing for an estimated 34 million passengers per year. This is up from 6.4 million in 1999.Indonesia's Directorate General of Air Communication predicts 54 million air travelers will buckle up annually by 2010
By comparison,India, with four timesIndonesia's population, is currently looking at only 27 million air passengers annually.
With trade growing and incomes rising there is huge scope for demand in quick air travel to expand. However, intense competition, which has sliced average ticket prices, has left many Indonesian airliners struggling to turn profits as they sell seats below cost to undercut their rivals.
“Some airlines are offering fares that are not sustainable, especially with high oil prices,” said Lim Liang Song, principal of Indigo Partners, a private-equity fund that recently invested in an Indonesian airline.
The problem, which has existed for years, has just gotten worse in the last few years.
“Domestic airlines have to keep costs below 3 [US] cents per kilometre or they're not going to survive,” said Kelly Humardani, president of Bali Air, back in early 2004. “Some airlines here are not set up as low-cost carriers, but are having to sell at a low fare. Some have costs around 5 cents per kilometre.”
Experts note that half ofIndonesia's estimated 262 airliners are at least 20 years old. Such aircraft require more maintenance checks to comply with international safety regulations and use at least 25 per cent more fuel than new aircraft. The problem is such that Indonesian safety authorities have banned airlines from importing any more aircraft more than 20 years old.
The Boeing 737 that went missing onSulawesiIslandwith 102 people on board had reportedly flown 45,371 hours in its 17-year life, according to news reports.
But it was not the only tragedy to have touchedIndonesia's airline industry, nor was it worst. Another Boeing 737 crashed shortly after takeoff fromMedanin September 2005, killing 147 people. The plane had flown more than 50,000 hours in 24 years. A Boeing MD-82 crash-landed at Solo, killing “only” 25 of the 141 people on board in November 2004 after having notched up 43,940 landings in 56,674 flight hours.
Altogether, there were 14 airplane accidents in 2005 and more than20 in2004.
The need to keep costs down has meant that airlines also face a high turnover of pilots and engineers who can find better offers and employment security with larger airlines or further abroad inIndiaand theMiddle East, where aviation is also booming.
Indonesia's major airports are the most affected by the breakneck growth, with delays becoming the norm.Jakarta'sCengkarengAirportis currently running 50 per cent above capacity.
Overcrowding on the tarmac has meant that many planes cannot fly more than six or seven hours per day, which is far short of the minimum ten hours considered necessary for low cost airlines to turn a profit.
Moreover, inIndonesiathe government still retains a monopoly on air fuel and this makes for higher prices than in other countries.
For all these reasons, many foreign lenders consider Indonesian airlines a risky investment and charge higher interest rates to accommodate the risk premium.
“Access to capital will be a major issue for private carriers going forward,” said Derek Sadubin, an analyst with the Center for Asia-Pacific Aviation.
InIndia, for example, foreigners have become key players in the privatisations ofDelhiand Mumbai airports. InIndonesia, by contrast, foreign interest has remained lukewarm because of the lower chances of profit. (PB)
