The grounding of Adam Air this week is just the latest example of turbulence in Indonesia's dynamic but erratic air transport industry.

Expanding since its launch in 2003 to a fleet of 21 Boeing 737s, Adam Air - named after founder Adam Suherman - was one of a rash of low-fare carriers that took to the air after Indonesia deregulated its domestic market in 2000. One of the best known is Lion Air, which has commitments to buy 178 737-900ERs and is planning joint venture airlines in Australia, Thailand and other Asian countries.

Traffic growth since deregulation has been phenomenal. According to Statistics Indonesia, a government department, by 2005 domestic passenger numbers had risen to nearly 19 million, up from 6.5 million in 2000.

Adam Air and Garuda W450 

Picture: Luthfi Muhamad Hasya

There has been a downside to this boom, with questions over safety standards and the financial health of the new starts as well as flag carrier Garuda Indonesia.

In his annual safety review for Flight International in January, operations/safety editor David Learmount wrote: "Indonesia's safety performance, consistently in the lower league for 25 years, was particularly bad in 2007." This included the fatal crash of an Adam Air 737 at the start of 2007, while Garuda also suffered the fatal crash of a 737 in March that year.

An incident on 10 March this year, where an Adam Air 737 skidded off the runway at Batam, was the beginning of a series of events in the past two weeks that ended with the carrier being grounded. Indonesia's transport ministry says it grounded the airline because of shortcomings in its operational, training and maintenance procedures.

Talking to Air Transport Intelligence after the grounding was announced, Adam Suherman said: "I am quite grateful for the order to ground the airline as it is probably for the best. Because of the financial troubles the morale of the staff has been very bad and that could be a problem for safety."

The Indonesian authorities have been striving in recent times to improve the country's safety oversight. In June last year it suspended the operating certificates of nine carriers after warning it was taking a serious look at safety standards.

In March 2007 it created a formula for ranking the country's airlines into three bands according to their safety performance. At that time, Adam Air was reportedly placed in the third, and least safe, band.

In an editorial in March 2007, Flight International called for Indonesia to take more urgent action over safety: "There is no country in which domestic aviation is more important to its success as a society and as an economy. If the Adam Air and Garuda accidents finally jolt the government into action, the 124 people killed in the two incidents will not have died in vain."

Since that time, European air safety authorities in June banned all Indonesian carriers (as well as many others) from operating to the European Union as part of a revision to its air transport blacklist.

On the positive side, earlier this year the Australian government agreed to provide nearly A$24 million ($22 million) over three years to help train Indonesian airworthiness inspectors, help improve air traffic management services and provide advice in accident investigations. In February, ICAO Council president Roberto Gonzalez met senior Indonesian transport officials to discuss the country's efforts to improve air safety.

Financial information for Indonesia's airlines is sketchy at best in a country where there are frequent newcomers and equally frequent failures. However, troubled Garuda, which has struggled for years under a heavy debt burden, says its performance is improving. It reported its first profit in four years earlier this year as cost-cutting drives paid off and traffic rose.

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Source: Airline Business