Privately-owned Sriwijaya Air, one of the largest domestic carriers in Indonesia, plans to launch a subsidiary that will operate a full service airline in the country’s growing air transport industry.

Sriwijaya Air president director Chandra Lie said in Jakarta on Tuesday that the airline was currently waiting for the Transportation Ministry to issue a flight permit for the new airline, which would be named Nam Air.

“We hope that the new domestic airline, which will be our subsidiary, will start its operations in 2013,” he said, adding that the new full service airline would begin with serving domestic routes.

In June last year, Sriwijaya Air inked a deal with Brazilian aircraft maker Embraer SA to order 20 Embraer 190 jets, which according to Chandra, would cost the airline around US$1 billion.

He said that the company would employ the Embraer aircraft for its new domestic airline, adding that the 100-seater Embraer 190s were compatible with serving airports with shorter runways.

In addition, Chandra said that his firm was also planning to buy 20 new 737-800 NG airplanes
from Boeing this year for around $1.5 billion. Earlier, the company had also bought 12 used Boeing B737-500 with a total value of $84 million to replace its Boeing B737-200.

Sriwijaya Airline, which at present has a market share of 12-13 percent in the country’s air transport market, operates 32 aircraft on domestic and international routes, according to the company.

“In 2011, we had a total of nine million passengers. We are looking to increase the figure to 11 million passengers this year. In the long term, we hope that the newly purchased airlines can boost our number of passengers by 15 percent annually,” he said.

Transportation Ministry air transportation director general Herry Bhakti S. Gumay previously told reporters in Jakarta that his office had already received an application for a flight permit, locally known as an SIUP, for the new airline.

However, he declined to reveal if and when the ministry would issue the flight permit.

Separately, Indonesia National Air Carrier Association (INACA) secretary general Tengku Burhanuddin said that Sriwijaya Air’s plan to launch the new full service airline was “positive” since it would give air passengers in the country more options.

“Indonesia has experience of positive economic growth and thus people’s buying power has also increased. With more players in the full service market, Indonesians will have more options,” he said.

He added, however, that the biggest market share in Southeast Asia’s largest economy would remain in the low-budget carrier market.

As previously reported by The Jakarta Post, the total number of passengers served by Indonesian airlines grew 16.78 percent to 58.79 million in 2011, including 8.15 million international passengers.

The country’s largest domestic carrier, Lion Air, topped the domestic aviation market, serving 24.97 million passengers, or 41.59 percent of the total.

Garuda, including its subsidiary, low-budget airline Citilink, was in second place, serving 18.76 million passengers, a 22.82 percent share of the market. (asa)

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