Rising domestic demand is prompting the country's airlines, unlike many others, to look to the future with optimism

Indonesia's domestic airlines plan to stock up on aircraft as rising domestic demand and cut-throat competition spurs local expansion.

Although the current crisis is expected to undermine anticipated growth, carriers foresee a continuing recovery to traffic figures which have virtually halved since the 13.4 million recorded trips in 1996.

Many carriers, including new entrants which launched last year following deregulation, will be adding domestic routes and upping frequencies, especially in eastern parts of the archipelago. New international services are as likely to start from provincial centres, rather than from Jakarta or Denpasar (Bali); their importance is growing as the government devolves power and revenues to the provinces.

The improved prospects come against a background of traffic figures that saw 7.9 million trips taken last year against 6.3 million in 1999, almost double the 10% growth rate most airlines and government officials are planning. If the local political situation remains calm, allowing the economy to begin recovery, traffic may eventually reach the peak of 1996.

Established Mandala Airlines is starting to replace its 12 Boeing 737-200s with leased -400s to prepare for the launch of regional services to Bangkok, Hong Kong, Seoul and Taipei next year, says commercial director Kamandanu. Mandala is also assessing larger aircraft for planned services to Australia in 2003. These plans may now be delayed by the global downturn, but Indonesian expansion should remain on track, says Kamandanu.

Mandala's move to 737-400s may set a trend, as the 737-200s, the mainstay of Indonesia's domestic fleet, are not Chapter 3 compliant, preventing them from operating to airports with noise controls.

AWAIR, which launched last year, will meanwhile lease three Boeing 737-300s between mid-October and November to resume services to Balikpapan, Batam, Makasar and Palembang from Jakarta, says marketing support manager Maman Sunarsa. Despite the deteriorating economic situation globally, the airline intends to lease two Airbus A310s from Singapore-based RegionAir for services to Bangkok, Perth and Singapore in 2002.

AWAIR is pursuing partnership deals with international airlines, including Asiana, Swissair, KLM and China Southern, to build up feeder traffic. Domestically, an alliance is being formed by Bouraq Indonesia, Dirgantara, Mandala and Pelita.

Fellow start-up Bayu Air plans to take three more leased 737-200s before the year-end, says managing director Permadi Wiratanuningrat. They will be used on Jakarta-Kuala Lumpur and Jakarta-Batam services being launched later this month.

Lion Airlines will serve Taipei and Seoul from Denpasar on 28 October, followed by Taipei via Hong Kong from Jakarta in November, says president Rusdi Kirana. The carrier is due to receive a Boeing MD-82 and a second A310 before the end of September from RegionAir. Another nine MD-82s will follow by mid-2002. Price falls have been cancelled out by rising insurance costs, says Kirana, who sees the 11 September attacks having little effect on Indonesia.

State-owned Merpati Nusantara is talking to international airlines looking to buy a stake, while a restructuring into five business units should be finished next year. President Wahyu Hidayat will not reveal more about prospective partners at this time, however.

Merpati will also close routes with no potential, while seeking new ones, especially from provincial airports. Hidayat is seeking investors to provide aircraft in return for a cut of the revenue on routes where the carrier sees potential but lacks equipment.

Source: Flight International