Defying global business trends is not easy. It requires courage, planning and execution. Most of all it requires a belief in free markets and liberalization.
That several Indonesian airlines are bucking global trends, posting profits while the global aviation industry is sweating blood, is proof that the country’s decision to open up the aviation industry some years ago was the right one.
For years national carrier Garuda was posting heavy losses and requiring subsidies from the government. Its in-flight services were below industry standards and its aircraft dated. But now, Garuda has announced Rp 1 trillion ($107 million) in net profit, 34 percent higher than the previous year. The flag carrier is also currently using the latest aircraft and its safety standards are in line with industry standards.
Other carriers are also following suit. Lion Air, Mandala and Sriwijaya Air are reporting profits too, although they have not so far provided details and figures to support their claims.
As a result of the opening of the aviation sector, more Indonesians now fly. In an archipelagic country the size of Indonesia, the importance of air links cannot be overemphasized.
The sector here is one of the fastest growing in the world as a consequence. Air fares have come down significantly and consumers have more choice. This is a win-win situation for both parties.
For the aviation industry to keep growing, two important developments must take place. Safety standards must continue to be raised, with tighter maintenance controls.
Not only should the safety aspects of aviation be tightly regulated but those rules should also be firmly and comprehensively enforced. Nothing will bring the industry crashing down more quickly than a few air disasters.
Every airline should always strive to enhance the quality of its manpower and, whenever possible, that of its fleet.
The country has already seen the impact a string of air disasters can have on the industry. A blanket ban on Indonesian airlines flying in European airspace was put in place in 2007.
So far the ban has only been lifted on a handful of carriers, allowing them to fly to Europe once again. The ban failed to inflict serious direct losses, but it did manage to drag down Indonesia’s image as a safe destination to visit.
But air safety alone will not be able to improve Indonesia’s chances in competing with neighboring nations in drawing business and tourists. A host of other factors need to be seriously addressed, key among them is infrastructure.
New airports must be built and older ones expanded and modernized. They must be equipped with more up-to-date technology. The country should also make the most of a 2008 law that opened the management of airports in the country to the private sector.
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February 1st, 2010 → 7:49 pm
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