National flag carrier Garuda Indonesia finance and risk management director Helmi Imam Satriyono said the airline would suffer losses without a “proper mechanism” for opening new routes to places for which there was low demand, such as areas in eastern Indonesia.

“The demand part should also be pushed,” he said over the phone on Tuesday.

He said it would take time to adjust demand to supply, while the airline would have to cover various costs, such as for fuel, crew and promotion.

To offset the risk, Helmi proposed regional governments allocate indirect subsidies such as by reserving airline seats, referred to as blocked seats.

He said regional governments could also help promote destinations. He cited Labuan Bajo, East Nusa Tenggara, declared by the government as one of the top 10 tourist destinations, to where the airline opened direct flights from Jakarta in October last year.

Garuda Indonesia suffered US$44.01 million in losses in the first nine months last year, compared to $51.4 million profit in the same period in 2015. The rapid expansion, which has not been followed by higher demand, was blamed as one of the reasons for the losses.

On Tuesday, Garuda Indonesia president director Arif Wibowo revealed that the government had requested the airline fly to Tana Toraja, South Sulawesi, another top emerging tourist destination.

However, he expressed concern over the limited length of the runway at Pongtiku Airport in Toraja, which was only around 1,300 meters, less than the required 1,600 meters for the airline’s ATR 72-600 aircraft.

“We need to evaluate the matter. We need aviation turbine fuel and [state oil and gas firm] Pertamina to be there as well so we don’t have to carry the fuel there,” Arif said.

If the all problems are solved, including the planned extension of the Pongtiku Airport runway to 2,000 meters next year, the airline would consider flying to the area, he said. This year, the airline will take delivery of three additional ATR 72-600 planes that will be deployed in the eastern part of Indonesia, including another emerging tourist destination, Morotai in North Maluku.

Sriwijaya Air corporate communications senior manager Agus Soedjono, meanwhile, reiterated that opening new routes depended on demand. “For Toraja [route], we will conduct a survey, a feasibility study,” he said, adding that slot time at airports like in Denpasar and Yogyakarta was also part of the problem.

The Tourism Ministry earlier pledged to offer financial incentives for airlines to open new routes in its bid to improve access to tourist sites and attract foreign tourists. The ministry will earmark at least US$15 million from its Rp 3.8 trillion ($284.1 million) budget this year to cushion the losses suffered by airlines in the initial operation of the new routes.

The government expects tourism to bring in $20 billion in foreign exchange by 2019 from the current $10 billion. It has also hopes to welcome 20 million foreign tourists by 2019. The country attracted 11.5 million foreign tourists in 2016, a little less than the targeted 12 million.

Transportation Minister Budi Karya Sumadi stated that the ministry had instructed state airport operator Angkasa Pura to offer stimulus packages for airlines flying international routes, such as waiving landing fees. “It has been done, but it turns out to be not enough. So what is not interesting, the city or the tourism package?” he said.

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