No Worries About Indonesia's Aviation Industry, Despite Recent Airline Suspension

Suspension of small airline Kalstar Aviation last week does not signal troubles in the national aviation industry, but is rather an isolated problem within the airline's management. (Antara Photo/Makna Zaezar)

By : Thresa Sandra Desfika | on 1:25 PM October 03, 2017
Category : News, Featured

Jakarta. Suspension of a small airline last week does not signal troubles in the national aviation industry, but is rather an isolated problem within the airline's management, the Indonesian National Air Carriers Association, or Inaca, said on Monday (02/10).

The Ministry of Transportation suspended Pontianak-based Kalstar Aviation for an undetermined period, after the company failed to meet the government's operational and financial standards.

The decision added to the string of bad news that for the past two years have been haunting Indonesia's aviation. In 2015, the ministry suspended six airlines and warned 13 others for failing to meet their financial obligations.

The ministry said earlier that 1,200 Indonesian pilots, who recently graduated from aviation schools, cannot find jobs in local airlines, which shows the industry is unlikely to expand as fast as expected. Flag carrier Garuda Indonesia, the country's second largest airline, this month announced its plan to delay the delivery of 20 Boeing and Airbus jets, putting its expansion on the back burner in favor of trimming costs.

Still, according to Inaca, the country's aviation industry is far from stalling.

"When we're talking about the health of the industry, we need to talk numbers. The fact is the aviation industry is still growing double-digit, though a bit lower than last year," Inaca deputy chairman Bayu Sutanto said.

Data from the Central Statistics Agency (BPS) showed the number of domestic airplanes passengers grew by 11 percent to 50.5 million in the first seven months of this year, compared with the same period a year ago.

"In general, the aviation industry is fine," Bayu said.

Inaca also sees the competition level in the market, which in more than 40 percent is dominated by the Lion Air Group, as open for other airlines that have proper strategies to claim it.

"All airlines certainly have their own problems. As long as an airline can meet the necessary requirements, it will operate competitively," said Bayu, who is also the managing director of small airline Transnusa Aviation Mandiri based in Kupang, East Nusa Tenggara.

According to Inaca, the ministry's decision to suspend Kalstar was for the sake of its passengers safety, considering that upon financial restrictions the airline could be tempted to cut corners in its operations, Bayu said.

Earlier, Transportation Minister Budi Karya Sumadi said the ministry had to suspend Kalstar flights, because the airline equity was negative — meaning it did not have enough assets to cover all its debts.

If Kalstar recovers and passes the ministry's audit, it will restore its operations, Budi said.

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