Thursday, 19 September 2019

Kadin: Foreign Airlines will Improve Efficiency

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Mahinda Arkiyasa

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  • TEMPO.CO, JakartaChairman of the Indonesian Chambers of Commerce and Industry (Kadin) Rosan Perkasa Roeslani, responded to the plan proposed by President Joko "Jokowi" Widodo on allowing foreign airlines to operate in Indonesia. Rosan agreed that foreign airlines will be able to create more business competition competition and improve the efficiency of the national aviation industry.

    "I think it would be very helpful if foreign airlines enter Indonesia, it would create [business] competition and improve efficiency," Rosan said on Thursday, June 6, 2019.

    Recently, President Jokowi had mentioned an idea to invite foreign airlines to operate in Indonesia. Jokowi stated that one of the methods to lower airline ticket prices is to create business competition.

    The idea means that foreign airlines will be allowed to establish a company in Indonesia. These foreign airlines will also be allowed to serve domestic routes to prevent cartel practices and create business competition in the domestic aviation industry.

    Currently, the Indonesian aviation industry is controlled by two major airlines group of companies, which are the Indonesian flag carrier Garuda Group, and Lion Group. Garuda Group consists of Garuda Indonesia, Citilink, Sriwijaya, and Nam Air. Meanwhile, Lion Group consists of Lion Air, batik Air, and Wings Air.

    Nevertheless, Rosan said that the soaring plane ticket prices is not only related to oligopoly market condition. He added that there are many factors that can affect  ticket prices, starting from avtur price, up to passenger load factor.

    He also added that has no worries over many concerns saying that foreign airlines will eradicate domestic airlines. Because, according to Rosan, the quality of services provided by Indonesian airlines is good.

    "So, the presence of foreign airlines will push existing players to rethink their strategy on how to attract more passengers, and this is good," Rosan concluded.

    DIAS PRASONGKO