Privately owned Batavia Air, which recently ceased operating, has said that cutthroat competition in the country’s aviation sector was behind its downfall.

Batavia’s commercial director, Sukirno Sukarna, said the airline did not have a great deal of funds to buy new airplanes and so compete with other carriers.

“We were operating with aging planes and we did not have enough money to buy new ones to support our expansion. We could not compete with other carriers; the tight competition ate us up,” Sukirno said.

Indonesia has seen a growing number of budget airlines start operations to tap into the rapidly rising number of air travelers.

Before the Central Jakarta Commercial Court declared the airline bankrupt on Jan. 30, it flew to 64 destinations with 33 aircraft, which included Boeing 737-300s and B737-400s.

Now, only seven aircraft are left as lessors have repossessed the other planes.

Besides the competition, an aviation expert said mismanagement and misguided strategies were major factors behind the bankruptcy of an airline.

Prominent aviation expert Dudi Sudibyo said that privately owned Batavia Air had made several questionable decisions during the past few years, which cost them dear.

“In Indonesia, the haj market is exclusive with the operators transporting pilgrims being national flag carrier Garuda Indonesia and Saudi Arabian Airlines. Batavia should have known this and prepared good back-up plans so that they could use their aircraft to serve better routes,” Dudi said on Friday.

Three years ago, Batavia leased two Airbus 330s. Based on the company’s plan, the aircraft were to be used to carry pilgrims during the annual haj season.

However, the airline did not win the haj transportation tender that was offered by the Religious Affairs Ministry.

According to the ministry’s haj and umrah (minor haj) director general, Slamet Riyanto, the government did not award the tender to Batavia as the airline did not have an exclusive landing permit at King Abdul Aziz Airport in Jeddah and it lacked enough aircraft to fly the pilgrims.

Garuda Indonesia leased 15 wide-bodied aircraft, including A330s and Boeing 747s, last year to carry some 112,000 pilgrims.

The International Lease Finance Corporation (ILFC) filed a bankruptcy petition against the carrier with the Central Jakarta Commercial Court as Batavia had failed to pay US$4.68 million for the two leased A330s.

The court approved the petition, forcing the airline to cease its operations, starting Jan. 31.

“Batavia used the aircraft to serve umrah. But, they were not consistent in delivering the service. If they had approached a much larger market like Saudi Arabian tourists, they would have benefitted a lot,” he said.

He said the aviation industry was the most regulated and that airlines needed to be well-managed in order to survive.

“A little slip-up, as happened with Batavia and Mandala, can harm the whole business,” he continued, adding that the
opening of several new routes, including Balikpapan–Singapore, had forced Mandala to restructure itself in 2011.

Separately, Indonesian National Air Carrier Association (INACA) secretary-general Tengku Burhanudin said that anything could happen in the airline business nowadays despite the industry’s positive growth.

“Just like any other business, airlines are not immune from collapse. Furthermore, airlines require significant investment in technology and human resources, requiring careful business management,” Tengku said.

Mandala Airlines announced on Friday that it would take over a number of routes formerly served by Batavia. “Mandala Airlines will operate as many additional flights as possible to accommodate the affected passengers in this difficult situation,” said Paul Rombeek, Mandala Airlines’ president director.

Mandala will serve stranded passengers who are flying from Jakarta to Padang, Pekanbaru, Singapore and Surabaya, and vice versa. Rebookings can be made at Mandala offices at airports or by email to: transfer@mandalaair.com.

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