Indonesia moves to consolidate number of operators in country

Pacific Royale Airways will lose its flight permit this week following a recent Indonesian government decision to revoke the Air Operators Certificates of 41 of the country's scheduled airlines including five charter operators and seven cargo carriers following their failure to satisfy a minimum fleet-size requirement that came into effect in January. 

Pacific Royale failed to resume services one year after it temporarily halted operations in October 2012. AIN News reports that Jakarta aims to reduce the number of operators from 53 to 28 and hopes the exercise will force smaller carriers to merge such that they are capable of sustaining financial shocks while simultaneously simplifying regulatory oversight. 

The ruling, which stipulates that airlines must operate no fewer than 10 aircraft each, of which five must be their own, was originally set to come into effect in 2009, only to be deferred twice on the airlines' request. 

The motivation behind the move stems from a desire to avoid a repetition of the 1998, 2007/8 financial crises which saw numerous airlines abruptly cease operations thereby disrupting services to many outlying communities. 

According Mr Harry Budianto, a senior official at the Ministry of Transport (MOT) in Jakarta, a lack of funds is the primary reason so many airlines failed to meet the minimum fleet-size requirement.

Source: CH-Aviation