Dynamic regional airlines reach for the skies
PRIVATELY-OWNED REGIONAL AIR CARRIERS SUCH AS BOURAQ, ALONG WITH STATE-OWNED AIRLINES SUCH AS MERPATI, ARE ENSURING THAT INDONESIA'S 17,000 ISLANDS AND 200 MILLION PLUS INHABITANTS STAY CONNECTED

Indonesia has ten private and two state-owned airlines, and no less than 450 airports.

Geographically, the Republic of Indonesia has a unique position. With 17,000 islands and over 200 million people, it is the largest archipelago in the world. It stretches along the equator over a distance of some 3,200 miles, similar to the distance from San Francisco to New York. Accordingly, air, sea, and land transport plays a vital role in the country. Although domestic air services have been in a state of flux since the economic downturn in the late 1990s (a few airlines have folded and the remainder are struggling to streamline in order to adapt to new market circumstances, i.e. increased liberalization and economic recovery), the country still counts more than ten private and two state-owned airlines and has nearly 450 airports. Among the five long-established national carriers are state-owned companies Garuda and Merpati, and private sector companies Mandala, Pelita and Bouraq.

Bouraq Indonesia Airlines is one of the best regional carriers in the Asia Pacific area with a solid domestic structure as its backbone. The company has been fulfilling its mission to bridge remote areas in Indonesia since 1970 when a young entrepreneur, Jerry Albert Sumendap, who had logging interests in Kalimantan, was forced to catch a charter flight to his destination since all domestic flights were either booked up or discontinued. At that time, the timber and oil booms were beginning and the remote areas outside Java were virtually isolated in terms of connecting transport. Mr. Sumendap realized that the need for reliable transport to rural areas was going to increase multifold and, when his charter flight was over, he bought the company. Some 30 years later, his son Danny Sumendap, who now heads the company, recalls the event. “I remember that it was 1969 and we were traveling to Kalimantan. At that time we had logging operations there and my father was eager to go up and check things out. The only flights then were with Garuda and they were overbooked so we had to charter a DC-3 that belonged to friend of my father’s. He owned the company but he hadn’t set up operations so my father decided to buy it from him and start operations. We began with just three DC-3s.” Since then, the company has grown to be one of the largest privately owned airlines in the country.

Today, Bouraq, like most Indonesian airlines, is still struggling to regain footing after the 1997 crisis when the company was operating 17 aircraft and looking to become a major regional player. Today, streamlining is taking precedence over expansion and the company has reduced its number of aircraft to seven. Nonetheless, Bouraq continues to maintain operational profits and has a $50 million yearly turnover. Mr. Sumendap is confident that the company will persevere. “Domestically we are going to make it, if only based on the fact that there is such a large population here. We have been maintaining our passenger numbers and since we’ve been flying to some cities for over 30 years, the people know us. Our focus at the moment is to try and keep our prices low and to maintain our reputation for punctuality,” he states. Future plans for the company do include going public, although a specific date has not yet been determined. Also, apart from the company’s current international route to Singapore, Bouraq has been given permission for others to Taipei and Australia, which Mr. Sumendap says they will keep open as a later option.

WAHYU HIDAYAT President Director of Merpati Nusantara Airlines

State-owned Merpati Nusantara is the second largest airline in Indonesia, just behind Garuda, of which it initially formed part (as its domestic flight airline). Since 1997, the state has owned 94% of shares, and Garuda retains the remainder. Merpati continues to dominate the domestic flight sector, flying to all major destinations within the country plus one international route to Singapore. The president director of the company, Wahyu Hidayat, is also the chairman of the Indonesian National Air Carriers Association. Hidayat believes that Indonesia’s decentralization may be the cure for the airline sector’s ills. “The number of people here is growing,” he says. “Indonesia has big potential. The decentralization process means that the growth centers are moving or at least spreading out to other areas. This means that people will have to fly to make money. Today four airlines are too many, but with the growth incurred by decentralization, 17, 20 or even 30 airlines won’t be enough in the future.”