Indonesia's troubled government-owned airline industry is in turmoil following the sacking of the president of domestic carrier Merpati Nusantara over his refusal to obey a Transport Ministry directive to lease 16 aircraft through a local company.

Ridwan Fataruddin's departure came just a few months after the resignation of Wage Mulyono, president of Garuda, also following disagreements with the government.

Transport minister Haryanto Dhanutitro told Merpati to take the 16 Indonesian-built CN-235 turboprop aircraft through PT Artha Saka, a leasing company whose major shareholder is Hutomo Mandala Putra, son of President Suharto.

Ridwan said he wasn't refusing to operate the aircraft but objected to the high cost of the lease, US$110,000 a month per aircraft. Merpati wanted the government to purchase the aircraft outright as part of an equity injection.

Shortly before Ridwan's dismissal, the country's government finance agency revealed it had asked the Transport Ministry to review Merpati's lease of eight Fokker F28s from Artha Saka in March. The agency said the Fokker leases should be cancelled or renegotiated because total annual operating costs for the eight jets were US$53 million against revenue of only US$43 million.

The government says Ridwan was sacked because of his own mismanagement but widespread media reporting of the row, unprecedented in Indonesia, reveals a behind the scenes battle over government economic management.

Transport minister Haryanto has appointed one of his own assistants, Budiarto Subroto, as Merpati's new president.

Tom Ballantyne

Source: Airline Business