The currency crisis that has hit southeast Asia is having a marked effect on Merpati Nusantara Airlines.
The state-owned carrier is suffering much more than Indonesia's other main carriers. Garuda earns more foreign currency and privately owned Sempati enjoys more flexibility, but Merpati finds its options limited by government policies that pit airline interests against other national concerns.
Indonesia's rupiah plummeted to an all-time low against the US dollar in September, down nearly 30 per cent since January and more than 10 per cent within the space of a month. As a result, Indonesia's national planning minister has conceded inflation is bound to rise. Yet Jakarta is still trying to keep any rise in check. When the Airlines Association of Indonesia (Inaca) sought approval to raise domestic fares from 11 to 16 cents per seat kilometre, citing the rupiah's devaluation as one reason, transport minister Haryanto denied the request, explaining: 'Inaca [has the authority] to adjust its domestic air fares to the rupiah depreciation but the basic fare should remain 11 cents.'
Sempati's response was to shelve 10 domestic and four regional routes. Yet, when Merpati recently sought to suspend 80 domestic routes Haryanto denied its request 'because it could obstruct development in some regions.' The only option the transport minister offered Merpati was to phase out routes with load factors under 30 per cent.
Sempati's decision to suspend Taiwan flights could push EVA Airways into an alliance with Merpati. EVA serves three Indonesian cities and confirms it has talked to Merpati.
David Knibb
David Knibb
Source: Airline Business
