Local Airlines Took Off In 2009

Jakarta Globe, Janeman Latul, January 30, 2010

Although Southeast Asia’s aviation industry saw its passenger volume dive 9 percent last year, Indonesia’s airlines gained altitude, registering an increase of up to 20 percent with further growth predicted this year.

The global airline industry has been forced to make deep capacity cuts since 2008 due to rising oil prices and the economic crisis hitting travel demand.

“Our company’s profit increased last year by more than 30 percent at Rp 1 trillion [$107 million] compared to 2008,” said Emirsyah Satar, chief executive of flag carrier PT Garuda Indonesia, which has the nation’s largest fleet.

“In terms of passengers, Garuda grew by 4 percent while those of regional airlines fell 9 percent,” he said.

Last year’s earnings represented a significant turnaround from poor performance in recent years. Garuda earned a net profit of Rp 669 billion in 2008 and Rp 60 billion in 2007.

The CEO attributed the company’s healthy finances to falling oil prices and an rebound in demand.

“Our domestic market is huge and still has room to grow. I predict it will swell by at least 11 percent just from local demands.” Emirsyah said, adding that the company will acquire 24 new aircraft this year.

He also said the airline was planning to add several new routes this year, including one linking Jakarta and Amsterdam by June, after the European Union partially lifted its ban on Indonesian airlines last year.

Edward Sirait, a director of PT Lion Mentari Airlines, the country’s biggest airline by passenger volume, also had good news to report.

“Last year passengers increased by around 30 million [across the sector], or 20 percent more than 2008,” Edward said. “Lion also increased its passenger volume by 10 to 12 percent compared with 2008. We have been able to generate healthy cash-flow, despite the purchase of new planes.”

In 2006, Lion signed an agreement with Seattle-based Boeing to purchase 30 737-900ERs, four of which started flying in December.

Edward declined to disclose his company’s financial results for 2009, saying its books have yet to be closed. “We will know the details by mid-February,” he said.

Tricia Megawati, spokeswoman for PT Mandala Airlines, one of the fastest growing low-cost carriers in recent years, said it also recorded better financial performance last year than in 2008.

In 2007, Mandala ordered 30 Airbus A320s worth $1.8 billion. It took delivery of four of the aircraft in 2009 and expects to receive more this year. PT Cardig Air owns 51 percent of the airline and US-based private equity fund Indigo Partners owns the remainder.

PT Sriwijaya Air chief commercial officer Toto Nursatyo said it also saw a steady rise in passengers, with an increase of 4.3 percent in 2008 and 5.6 percent in 2009. “This year we estimate that it will further rise by 11 to 12 percent,” he said.

Toto said the company’s cash-flow was healthy, and that it would buy six new aircraft this year to complement its fleet of 24.