Executive column: Safety, on time performance pivotal in Sriwijaya's strategy
The Jakarta Post
With only a total fleet compliment of 43 aircraft, compared with the 244 operated by Lion Air and the 190 by national flag carrier Garuda Indonesia airlines, privately owned Sriwijaya Air manages to sit as the country's third-largest carrier. On the sidelines of a recent delivery ceremony for two Next-Generation 737-900ER narrow-body commercial jets worth US$200 million from US aerospace giant Boeing to Sriwijaya Air in Seattle, the airline's owner and CEO, Chandra Lie, discussed the company's strategies in grabbing a significant amount of passengers in the highly competitive aviation industry to The Jakarta Post's Haeril Halim. Here is an edited excerpt of the interview:
Question: What strategies will Sriwijaya Air apply in order to maintain or further increase its market share to compete with strong rivals Lion Air and Garuda Indonesia?
Answer: Every airline should be safety-minded. A professional airline will no longer talk about safety because it is an integrated part of services airlines must provide for flying passengers.
To compete with other airlines we will keep adding more aircraft in order to keep Sriwijaya's good record as the third-largest carrier in the country. Staying at the third position within this competitive market is a very rational target for us. But people have to know that Sriwijaya is one step further in terms of on-time performance (OTP) compare to other airlines.
Sriwijaya's sister company NAM Air ranked first with 94 percent OTP, while Sriwijaya managed to secure 85 percent OTP, putting it in fourth place after full-service carrier Batik Air [which is Lion Air's subsidiary] and national flag carrier Garuda Indonesia, which are respectively in the second and third positions.
So there are two things that Sriwijaya will focus on. The first one is the level of its OTP and the second one is providing services at the comfort of passengers.
We really appreciate the government's move to set the minimum price for airlines tickets. How can you expect safety from cheap ticket prices? The policy is to ensure that airlines would comply with safety procedures because airlines need money for maintenance, etc.
It is predicted that every person in this country of 250 million people will fly at least three times a year. So can you see how good the future of aviation industry is based on that projection?
In the first half of this year, we managed to get a 3 percent increase in the market share compared to the same period last year. In the second semester this year, we will increase efforts to increase the number of passengers by 6 to 8 percent.
What's your business plan in terms of adding more airplanes for Sriwijaya in the future?
Our business plan is very clear. In 2004, Sriwijaya planned to bring 10 new aircraft in 2015 to renew the fleet. Out of surprise we even managed to bring in 11 new airplanes, some of them are Boeing 737-800 family, in 2015.
The 2004 business plan also outlined our commitment to add another 10 new aircraft to the fleet in 2016 to have more 737-800 airliners in 2016. Meanwhile, in 2017, we also intend to have 10 new airplanes to expand our ability to do domestic and international flights.
In addition, we all know that in the Paris Airshow in June we also ordered 20 new Boeing 737 of the MAX family. The Boeing 737-MAX is currently being established by Boeing and it is expected that by the end of 2017 the new type of Boeing aircraft will first be delivered to Boeing costumers around the world.
We hope that right after the first launch of the 737 MAX, Sriwijaya could get one or two from Boeing to support our existing fleet in Indonesia. We expect that in 2018 and 2019 we can receive all the 20 Boeing 737 MAXes we ordered at the Paris Airshow.
Any plan to expand new domestic routes? If so, what are the new routes to be opened?
We have our commitment to expand our wings to any possible routes in Indonesia. We will open new routes to any airports in Indonesia that have runways that could facilitate the Boeing 737 family we currently have. We also plan to add flight frequencies on existing routes.
Currently, Sriwijaya manages to fly to all regions in Indonesia that have airports like Java, Papua, Sulawesi and Kalimantan, as well as Sumatra. We encourage local administrations to build their airports or to expand their runways so that Sriwijaya could fly there to bring in passengers. Regions that do not have airports will be left behind. If regions are accessible by air travel, then it will be easier for investors to come see potential business investments. The point is we are closely watching any local administrations' moves to build new airports or to widen their runways.
What has Sriwijaya prepared to face the ever-challenging and competitive domestic and regional market in the upcoming ASEAN Economic Community (AEC)?
We have to be ready to face it. There is no special preparation for it as we have been preparing things to face it for a long time. We will always provide better services for passengers. With the good services we are offering now we let people choose their preferences.
We always keep our good image up. We believe that people now want to buy time efficiency, that's why we will always improve our OTP level. With the current abilities that we have, Sriwijaya is not afraid to face the open skies battle. We will move forward for sure.
We will add more regional routes in addition to our existing regional routes, including to Beijing, Hangzhou, Guilin, Ningbo, Guangzhou, Nanking, Chengdu, Chongqing and Pudong from Denpasar in Bali. As of today, Sriwijaya also flies to Penang, Terengganu and Ipoh in neighboring Malaysia and Dili in Timor Leste.
Our international routes for sure help develop Indonesia's tourism and economy. Think about this, for example: An airplane could carry a total of 190 Chinese tourists to Indonesia. Each of them would bring with them, let's say, a minimum of $100 to Indonesia. They will spend the money to buy food and souvenirs in Indonesia and it will help increase people's income per capita because workers like taxi drivers and food sellers would get benefits from the presence of international tourists in Indonesia.
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