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Quick! Quick! Hatch us Some Airplanes

Many Indonesian Airlines Facing Closure Unless they Grow Their Fleets to 10 Aircraft Before January 2012 Deadline.


Bali News: Indonesia, aviation, airlines, regulation
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(11/1/2010)

A number of Indonesian airlines are facing real difficulties in fulfilling the coming legal requirement to operate a minimum of 10 aircraft. Transportation laws in Indonesia require Indonesian air operators to either own or rent a minimum 10 aircraft before a deadline of January 12, 2012, or risk losing their air operating certification.

The Secretary-General of the Indonesia National Air Carriers Association (INACA), Tengku Burhanuddin, claims many of his members are unable to meet the 10 plane requirement due to the a worldwide shortage of viable aircraft and the current lack of available credit facilities needed to acquire significant additions to the fleets.

As reported by Bisnis Indonesia and according to data provided by the Ministry of Transportation, the are currently 16 registered national air carriers operating in Indonesia. Each of these companies are required under the law to have at least five fully owned planes and five rented planes in operation by the 2012 deadline date.

In fact, only seven of the sixteen Indonesian air carriers currently meet the fleet size requirements, they are: Garuda Indonesia, Merpati Nusantara, Lion Air, Batavia Air, Wings Air, Sriwijaya Air and Indonesia Air Transport.

This leave 9 other Indonesian airlines with only 15 months to cover their aiplane shortfall. According to Bisnis Indonesia, the airlines scrambling to find more aircraft are:

• Riau Airlines (Owning 3, operating 5)

• KAL Star Aviation (Operating 2, ownership unclear)

• Pelita Air Service (Operating 3, ownership unclear)

• Travira AirOperating 2, ownership unclear)

• Trigana Air Service (Operating 12, ownership unclear)

• Indonesian AirAsia (Operating 15, all airplanes under option to buy)

• Travel Express (Fleet details unavailable)

• Dirgantara Air Service (Fleet details unavailable)

Burhanuddin feels that if the minimum fleet size rules are enforced, many airlines in Indonesia will be forced with the choice of merging or ceasing to operate.

The investment to bring an airlines armada up to 10 aircraft is not insubstantial. For example, the cost of a new Boeing 737 can range from between US$51 -$87 million, depending on the specifications of the aircraft. Added to the high cost of acquiring new airplanes, it remains doubtful if an airline with the required funds in hand could obtain delivery from a major airplane manufacturer in time to meet the January 2012 cut-off date.

Helmi Pamuraharjo, Director General of Civil Aviation, insist the January 2012 date is non-negotiable with operators long aware of the approaching deadline. He urged the affected airlines to consider merging with other domestic or foreign carriers in order to meet the deadline. Indonesian law, however, requires that 51% of any airline's share formed with a foreign partner must remain in Indonesian hands.

Riau Airlines (RAL) is reportedly unable to operate its small fleet of Fokker 50 aircraft due to missed payments to a local bank and a leasing company.

Mandala Airlines is currently flying only 5 aircraft, down from the 11 planes it flew in 2008. However, the Head of Corporate Communications for Mandala, Nurmaria Sarosa, has said that Mandala remains confident that they will have the mandated 10 aircraft in their fleet by the 2012 date.

A spokesman for Indonesia AirAsia, Audrey Petriny, said that new Airbus 320 on order from France will start arriving in 2011. By 2012 Indonesian AirAsia says it will be flying 20 Airbus 320s.


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