All-You-Can-Fly Promo May Spark Heated Competition Among Airlines

All-You-Can-Fly Promo May Spark Heated Competition Among Airlines


Jakarta — When Rizal Juan saw an advertisement for a full year of unlimited domestic flights at a fixed once-off price, he was immediately hooked. For the 31-year-old account executive at a Jakarta advertising agency, flying has been part of his routine, necessitated by his job and peculiar domestic arrangement. “I usually fly at least four times a month to meet my clients and visit my wife in Surabaya,” Rizal said. So when Sriwijaya Air, Indonesia’s third largest airlines, introduced its SJ Travel Pass, which allows passengers unlimited flights to destinations across Indonesia for 12 months at only Rp 12 million ($871 million), it was much to theĀ  delight of frequent flyers such as Rizal. “I immediately took up the promo through the website once I heard it,” he said. Rizal said he has since managed to cut his monthly flight bill by 60 percent. But better still he used the money he has saved to sign his wife up for the same program and together they can now travel to various parts of the country. “We will definitely fly more often with this pass to visit more places in Indonesia,” Rizal said. For the airline, this was exactly the response it had in mind. Toto Nusatyo, commercial director at Sriwijaya Air said that the travel pass forms part of the airline’s strategy to fill in empty seats. The airline took its cue from the likes of Azul Brazilian Airlines, which offers a 10-day unlimited flight package to destinations in Brazil, or California-based airline Surf Air, which has similar arrangement on routes between the United States and Europe. AirAsia, Southeast Asia’s largest budget airline has Asean Pass, which allows travelers to fly to 20 cities within the Association of Southeast Asian Nations in 60 days for $290. Some observers believe Sriwijaya Air went to the extreme with its all-you-can-fly programĀ and that it will likely spark heated competition among local airlines. Growth in passenger numbers has slowed considerably in Indonesia. According to the Central Statistics Agency (BPS) there were 22.2 million air travelers in the first quarter of 2018, representing a 9.89 percent increase in the same period last year, while in 2016, the quarterly growth stood at 20 percent. Increasing aviation fuel costs add further financial pressures on airlines. According to the International Air Transport Association (IATA), the price of fuel jet rose 6 percent over the past month and it now cost 46 percent more than a year ago. “Indonesian airlines are most likely facing financial difficulties caused by various factors. One is operating costs that are now increasing because of a stronger dollar against the rupiah. Note that around 80 percent of airline’s costs are paid in dollars,” Arista Atmadjati, director of Arista Indonesia Aviation Center. “The quick money is usually to finance short-term expenses, such as aircraft rental fee. If they are late with the payments, the lessors can take the aircraft back,” added Arista, who is a lecturer at Gadjah Mada University in Yogyakarta. However, Sriwijaya Air claims otherwise, insisting that its finances are healthy. “There are no financial problems. We just want to fill our empty seats,” Toto said. Still, the same cannot be said for national flag carrier Garuda Indonesia and Indonesia AirAsia, which have both been suffering financial losses since 2017. Garuda Indonesia last year posted an annual loss of $213.4 million and another net loss of $64.3 million in the first quarter of this year. “All airlines suffer heavy losses; all around the globe do,” Lion Air president director Edward Sirait said. Aviation expert Alvin Lie said the continuous annual losses are the result of heated competition between airlines in Indonesia. “Many customers are price sensitive. Not all of them, but many. So airlines will offer promotions to attract passengers and minimize losses,” he said.

Source: jakartaglobe:id