Cheap Flights Attract Passengers

KOMPAS/PRIYOMBODO

A banner ad for the Citilink low-cost carrier adorns a wall on Saturday (24/11/2018) at Terminal 1, Soekarno-Hatta International Airport in Tangerang, Banten. Low-cost carriers have helped boost the number of air passengers on both domestic and foreign flights.

JAKARTA, KOMPAS – The low-cost carrier (LCC) industry is expected to see continuing growth in Indonesia, driven partly by an annual economic growth of more than 5 percent. The growing economy also means growth in air travel consumers.

Meanwhile, LCCs offer consumers the option to choose and purchase only those services they need. This means that consumers do not pay for services they do not want during a flight, such as meals or in-flight entertainment.

Kompas tested this facility on Monday (26/11/2018) evening, when it searched for flights departing on Dec. 27, 2018 through an online flight ticketing service. It found a ticket for a 3-hour, 40-minute flight from Jakarta\'s Soekarno-Hatta International Airport to Bangkok’s Don Mueang International Airport that cost Rp 920,000 (US$63.55) per person, including 20 kilograms of checked baggage. Bangkok’s Don Mueang airport is an LCC hub.

Meanwhile, a ticket for one passenger on a full-service flight on the same route and date cost Rp 3.6 million per passenger. This flight arrives at Suvarnabhumi International Airport and includes a meal, in-flight entertainment and 30 kilograms of checked baggage.

“The global seat capacity for low-cost flights was 1.5 billion in 2017. The figure has grown 11 percent every year. This double-digit growth has been the norm for the past three years,” said commercial flight industry communications and policy analyst Kleopas Danang Bintoroyakti.

The attractiveness of LCC is also reflected in the industry’s growing market share from 16.5 percent in 2007 to 28.7 percent in 2017. “Indonesia is the fourth largest market for domestic flights after China, the US and India,” said Danang.

The country’s airline industry expects to see 360 million domestic passengers by 2036, a highly promising market for LCCs. “Full-service airlines are responding to the potential by establishing LCC subsidiaries,” said Danang.

Flag carrier Garuda Indonesia, for instance, operates LCC Citilink Indonesia. Similarly, Qantas operates Jetstar Airways and Singapore Airlines has Scoot and Tigerair.

Scoot is Singapore Airlines’ long-haul LCC and offers cheap flights from Singapore to Berlin, Athena and Honolulu, as well as other major world cities. Scoot CEO Lee Lik Hsin said that the airline had invested in 17 Boeing 787 Dreamliner aircraft.

Aviatory Indonesia president director Ziva Narendra said that airlines could grab opportunities in Indonesia’s LCC industry. “Airlines must focus on optimizing and prioritizing the four key aspects of [the industry], namely safety, security, service and regulatory compliance,” he said.

The main consideration for consumers is the competitive prices of LCCs. Moreover, LCCs frequently offer more flights and routes.

Dian Amalia, an employee at an East Kalimantan mining company, said that she often flew LCCs despite her company’s policy of offering flights on full-service airlines for all employees, as LCCs offered routes that were suited her needs “On my week off, I return [home] to East Java. Only LCCs fly the Balikpapan-Surabaya return route,” she said.

With a work schedule that provides one week off every four weeks, Dian is reluctant to take transit flights with stopovers in other cities.

Financial planner Prita Hapsari Ghozie said that consumer lifestyles looking for instant experiences also influenced the LCC industry, especially as travel and practicality were popular among millennials.

Openness

In line with air travel liberalization and the 2015 ASEAN Open Sky Policy, Indonesia has opened the five cities of Denpasar (Bali), Jakarta, Makassar, Medan and Surabaya as ASEAN hubs.

“There are no other [ASEAN hubs] aside from these five [cities], except for regional airports with bilateral agreements, like Hanandjoeddin International Airport in Belitung,” said Transportation Minister Budi Karya Sumadi.

Budi said that Indonesian airlines did not serve all ASEAN cities. However, this was not a problem, as Indonesian airlines were busy serving passengers on many domestic routes.

Budi said that flights from Manila to Indonesian cities were served primarily by Cebu Pacific Air instead of Indonesian carriers, because more travelers from the Philippines visited Indonesia than the other way around.

ASEAN cooperation director general Jose Antonio Morato Tavares at the Foreign Ministry said that Indonesia had signed several agreements and protocols under the ASEAN Open Sky Policy, with the latest signed on the sidelines of the ASEAN Transportation Ministers’ Meeting on Nov. 5-9 in Bangkok.

Indonesia had also ratified agreements such as the Multilateral Agreement on the Full Liberalisation of Passenger Air Services (MAFLPAS) and its two protocols.

The agreements and protocols will enable ASEAN-approved airlines access to open, unimpeded operations in airspaces across the region.

(ARN/JUD/RAZ)