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NEWS UPDATES Asean Affairs           13  July 2011

Budget carrier meets Indo middle class needs

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Punctuality may be AirAsia's other strong point compared to Indonesia's own budget airlines. Lion Air (for example) has a national schedule that is never on time, and many others (including Garuda) continue to disappoint Indonesia's growing middle-class.

The Lion Air executive's comment here proves how the domestic companies disregard service excellence: "Why should we worry about our competitors?"

Since there are middle-class Indonesians who expect world-class service from domestic carriers, the Malaysians have stepped in and taken that upper-crust segment.

Punctuality and service are what the foreigners offer, so Indonesian companies should at least keep up... if not exceed them!

Budget carrier Indonesia AirAsia says it expects its passenger numbers to skyrocket 15 percent this year with the addition of new aircraft ahead of a possible listing later this year.

The local offshoot of Malaysian airline AirAsia appears on track to smash the target, reporting that it had flown 2.35 million passengers in the first half the year, up 28 percent on the same period in 2010. Total passenger numbers for last year were in turn up 13 per cent on 2009.

The Indonesian carrier has previously flagged plans to seek up to $200 million in an initial public offering later this year, in which it will sell a 20 percent stake in itself.

"We're optimistic that we can fly 4.5 million passengers this year because the Indonesian domestic market is expected to keep growing until 2015," said Dharmadi, IAA's president director.

It was last week revealed that AirAsia was purchasing 300 Airbus A320neo aircraft in a deal valued at $27 billion. Dharmadi said there were no plan to revise IAA's expansion plan in light of its parent company's growth.

IAA bought three aircraft in 2010, two this year, and will add another five next year, he said. IAA currently has 20 aircraft.

Dharmadi said the airline planned to open new routes, but he declined to reveal details. Currently, IAA serves 52 domestic and international routes.

The aircraft expansion has helped the airline to post a profit of Rp 474 billion ($55.5 million) last year, more than four times the 2009 figure. Revenue climbed 37 percent to Rp 2.8 trillion. Dharmadi reiterated a March prediction that revenue would rise 15 percent this year.

"There's a huge potential for low-cost carriers in Indonesia,'' Dharmadi said. "Last year, the number of airplane passengers was recorded at more than 50 million people, and we expect this to increase by about 60 percent to 77.6 million people in 2015."

In order to offset fuel costs, the airline plans to hedge its purchases. It also sought a fuel surcharge in May.


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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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