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Unhealthy Competition in Indonesia's Skies?

Veteran Aviation Observer Looks at the Effects of Intense Competition by Nation's Domestic Carriers.

(2/21/2004) Veteran aviation observer and editor of Angkasa Magazine, Mr. Dudi Sudibyo has suggested that the intensive competition now taking place between the numerous domestic air carriers operating in Indonesia may end up threatening the long-term viability of the airlines involved.

Speaking in the English-language Jakarta Post, Mr. Sudibyo said: "With the current prices, people may only have to pay between Rp. 200,000 and Rp. 300,000 (about US$ 35.71) to go from Jakarta to Surabaya, while the company must pay about US$ 80,000 to US$ 300,000 to lease a single Boeing 737 in one month."

He went on to suggest that revenues may be falling short of actual operating costs as the result of the current stiff price competition taking place in the domestic air transportation market.

Established carriers, such as Garuda Indonesia, have also suffered as a result of currently competitive market situation. Garuda's pretax profits for 2003 totaled Rp. 238.7 billion (approximately US$ 28 million), down from Rp. 1 trillion (approximately US$ 117.6 million) for 2002.