Alan Peaford

Four domestic Indonesian airlines were said last night to be on the verge of collapse after the Indonesian National Air Carriers Association (INACA) held an emergency meeting with the directorate general of air communications in an attempt to save them from folding.

INACA president Hadi Soemarto says the four carriers - Bouraq, DAS, Mandala and Sempati - are in "serious danger" of ceasing operations because of enormous losses sustained as a result of the regional economic crisis that has badly affected Indonesia.

The Indonesians will be seeking ways to defer payments on leased aircraft until they can resolve the financial situation.

Soemarto met with director-general Zainuddin Sikado to discuss ways the four carriers can work together to maintain domestic services in the country.

According to ATI informal talks have been taking place between INACA and the heads of the four airlines for about a month on possible joint services in the hope that costs can be cut.

"There is no chance of a merger of these airlines because the management is so different," Soemarto says. "But they have to work together or else they can all collapse. That will be very bad for everybody. People still need to fly.

"We all fear that they are going to stop operating if the monetary crisis goes on like this. The domestic airlines only earn rupiah, and the rate of the rupiah is still going down even though the costs are based on US dollars. It is a very bad situation.

"We are hoping that an agreement can be made, so they can work together in Indonesia, maybe on joint services, or operating aircraft."

Indonesia has been one of the worst hit by the regional turmoil, which has caused the rupiah to lose as much as 75% of its value since July 1997.

All airlines, including national carrier Garuda Indonesia and Merpati, have slashed flight services, although Soemarto says there is no danger that these two will collapse because of their direct government ownership.

Source: Flight Daily News