PanAm_DC10 From Australia, joined Aug 2000, 3078 posts, RR: 88 Posted (3 years 4 days 21 hours ago) and read 2059 times:
AIRLINERS.NET CREW COMMUNITY MANAGER
Adam Air of Indonesia are looking to add to their fleet;
By Kyunghee Park and Paul Gordon
Nov. 10 (Bloomberg) -- SA)">PT Adam Skyconnection Airlines, an Indonesia-based low-fare carrier, expects profit will increase about 10 percent next year as it expands its fleet to meet travel demand.
The three year-old airline plans to increase capacity by 35 percent next year by adding 10 leased Boeing Co. 737 aircraft to its fleet, said Adam Air's President Director Adam Suherman in an interview in Singapore today. It forecasts a less than 5 percent growth in profit this year.
In February, Adam Air said it has taken the first step in its five-year buildup for a 60-plane fleet by leasing six A320 planes and buying 24 of the same model to replace its 10 year- Aircraft by Boeing Co. For the 30 other planes, the airline may use Boeing's 737-800 or 737-900. It's also considering using aircraft by Empresa Brasileira de Aeronautica SA.
Of note, they have yet to firm the 24 A32X series which were announced in February.
Meanwhile in Malaysia AirAsia will exercise 30 A320 Options and look to source more airplanes, possibly 737s.
[Limited Fair Use Excerpt]
Fernandes said the board has not approved of the additional planes on top of the 100 Airbus SAS A320 it has ordered and 30 on option. ''We'll exercise the 30 and look for some more. But that's my own personal view.'' He said that aside from Airbus planes, Boeing Co.'s 737 aircraft may be possible addition to its fleet.
Aggressive expansion plans ahead for the 2 carriers with a total of 60 additional frames plannned. Perhaps HB-IWC or Mandala69 could shed some more information on this, it would be appreciated.
HB-IWC From Greece, joined Sep 2000, 3907 posts, RR: 78 Reply 2, posted (3 years 4 days 20 hours ago) and read 1966 times:
Adam Air's fleet planning is chaotic as ever. The airline currently operates an eclectic fleet of 22 B737 aircraft of the B732/733/734/735 types and is planning to add more 737 frames in the near future (2 more by March 2007). Adam will have to look for a solution to replace the 732s in the active fleet, as according to a new directory of the Indonesian Transport Ministry, no Indonesian carriers will be allowed to operate the B732 in 2 years from now. [This goverment directive make absolutely no sense to me, but that's a completely different discussion.]
Interesting is that today's Jakarta Post carries an interview with the Adam Air CEO, in which he only mentions the addition of 2 (two) Airbus aircraft somewhere in 2008. No word about the six A320s that were supposedly leased, much less about the firming up of 24 A320s which were announced earlier this year.
I really have no idea where this airline is heading in terms of fleet planning, but my guess is that they are facing serious hurdles in securing the financial resources for the purchase of new aircraft. That is likely the reason why the 24 aircraft deal with Airbus is yet to be firmed. For the time being, I expect this airline to resort itself to adding more leased in 737 frames.
This discussion has to be seen in light of the difficult domestic operating environment of Indonesian airlines at large. Sure enough, less than 2 percent of Indonesians have currently access to air travel, so there is tremendous growth potential. Yet, at the same time, fares remain under pressure, because the buying power of Indonesians remains limited following last year's string of price increases which led to higher interest rates but which were not followed by similar wage increases. As such, there is virtually no room for airfare increases - except during very limited peak travel times - for any attempt to increase ticket prices will move passengers away from air travel and back to other means of transportation.
In conclusion, Indonesian airlines are continuing to face challenging market conditions and I have serious doubts over the financial viability of projects such as Lion Air's 60 B739ER frames - which are due to start arriving any day now - or Adam's 24 A320s.
HB-IWC From Greece, joined Sep 2000, 3907 posts, RR: 78 Reply 7, posted (3 years 4 days 13 hours ago) and read 1629 times:
Quoting PanAm_DC10 (Reply 5): Minor clarification, the 739ER is scheduled for EIS mid 2007
Well, that is certainly interesting news, for sure since I borrowed the expression 'any day now' from Lion Air itself, which in a recent PR update to local travel agents used exactly this expression to announce upcoming increases in the onboard comfort levels. I wonder whether they know themselves when they are going to put the aircraft into service.
As for Air Asia, I heard Mr. Fernandez declaring on the BBC today that his focus is firmly on the Asean countries, where there is still plenty of room for expansion. He stated explicitly that he doesn't want to be dragged into the rush towards India and China.
Mandala499 From Indonesia, joined Aug 2001, 4535 posts, RR: 60 Reply 8, posted (3 years 4 days 11 hours ago) and read 1526 times:
Adam's chaos is not limited to fleet planning. HR is a mess. This is an airline that would fire a person from the job because that person had to go to his father's funeral with the management citing "His dead father does not pay for his wages! We do!"
60 airplanes ordered? Sounds like another "my ego vs your ego" between Lion and Adam... which, has no financial basis whatsoever. The country cannot take in 60 airplanes each from 2 airlines operating domestically without some massive infrastructure expansion... it IS impossible... you can count the number of aircraft parking stands outside Jakarta and you'd be struggling to accomodate the aircraft... even Jakarta's parking stands are limited to 60 or so stands for domestic aircraft (which is probably the maximum feasible currently).
So, for a future fleet of 60 Lion, 60 Adam, 30 Batavia, 20 Mandala, 20 Sriwijaya, 10 Indonesia Air Asia, you have a national fleet of about 200 aircraft planned... add 40 - 60 by GA by the time those numbers are complete (which is a big IF), and guess what? You'd run out of aircraft parking stand allover the country (for 732 and above capability).
There is no doubt that some of these fleet plans are betting on the demise of one of the big competitors.
Adam itself is financially run by beancounters, the senior HR capability of their finance department itself is often questioned.
As for Air Asia and Tony Fernandez, there are "unhealthy rumours" about Air Asia's long term financial viability amongst the financial community here.
Mandala499
When losing situational awareness, pray Cumulus Granitus isn't nearby !
PolymerPlane From United States, joined May 2006, 810 posts, RR: 3 Reply 9, posted (3 years 4 days 11 hours ago) and read 1518 times:
Quoting HB-IWC (Reply 2): Yet, at the same time, fares remain under pressure, because the buying power of Indonesians remains limited following last year's string of price increases which led to higher interest rates but which were not followed by similar wage increases. As such, there is virtually no room for airfare increases - except during very limited peak travel times - for any attempt to increase ticket prices will move passengers away from air travel and back to other means of transportation.
Well, the fact is still that Indonesia is a poor nation. Eventhough there's a large potential, as long as the economy is still based on inefficient agriculture, and low wage worker, those potential may never be realized.
However, inability of Indonesians to afford air travel does not really tie with the current general price increase, interest rate or wage increase. Those 98% of the population, eventhough with wages adjusted with inflasion, or even with modest increase, those 98% would not still be able to afford air travel at a regular basis.
HB-IWC From Greece, joined Sep 2000, 3907 posts, RR: 78 Reply 10, posted (3 years 4 days 11 hours ago) and read 1472 times:
Quoting PolymerPlane (Reply 9): Those 98% of the population, eventhough with wages adjusted with inflasion, or even with modest increase, those 98% would not still be able to afford air travel at a regular basis.
You are absolutely right. I was talking about part of the 2% of the population which have recently found air travel to be a feasible alternativel to other transportation options. For quite some of those people, an increase in airfares would mean a return to travel by bus, train and ferry. Meanwhile, Indonesian airlines are continuing to build their fleets at the risk of oversaturation in the short term.
HB-IWC From Greece, joined Sep 2000, 3907 posts, RR: 78 Reply 11, posted (3 years 4 days 10 hours ago) and read 1428 times:
Quoting Mandala499 (Reply 8): So, for a future fleet of 60 Lion, 60 Adam, 30 Batavia, 20 Mandala, 20 Sriwijaya, 10 Indonesia Air Asia, you have a national fleet of about 200 aircraft planned... add 40 - 60 by GA by the time those numbers are complete (which is a big IF), and guess what? You'd run out of aircraft parking stand allover the country (for 732 and above capability).
Before even addressing the problem of a lack of parking bays at CGK, I believe a much more important and logically prior issue is where the airlines involved are going to find the passengers to fill all the seats on these aircraft. The domestic market is nearby its saturation point as it is and can definitely not absorb any fare increases without losing a significant part of its customer base. So, which will be the passengers traveling on the aircraft mentioned in all these big plans? Unless the airlines involved are planning to give away the tickets for free, I honestly don't see it happening...
Mandala499 From Indonesia, joined Aug 2001, 4535 posts, RR: 60 Reply 12, posted (3 years 4 days 9 hours ago) and read 1372 times:
HB-IWC,
How they're gonna fill the seats? Isn't that your part
Whether it has reached saturation point or not, I just came off a trip and the flights were full, and the fares have been relatively high... but this is not consistent throughout the country or the year. So, growth will be slow due to the low purchasing power as you said... Even as optimistically as possible, I too, wonder how they'll fill those planes up... They'll probably use the excuse of "we'll go intl"... which I don't buy at all given their "mode of operations" which could give a safety inspector instant death due to shock... that's why I also offered the "lack of parking space" problems...
So, Adam's got some serious change to do before they get those A320s, otherwise, it'll be a quick death.
Mandala499
When losing situational awareness, pray Cumulus Granitus isn't nearby !
I agree that growth can be expected to be slow, but how do you reconcile this with the massive orders from some of the local players. Even if the likes of Lion and Adam are ridding themselves of all their older frames, they still plan to grow two- or threefold in the next couple of years. I honestly don't see it happening, and I will be very surprised if Lion can profitably deploy even 20 of its 60 B739ERs.
Mandala499 From Indonesia, joined Aug 2001, 4535 posts, RR: 60 Reply 14, posted (3 years 4 days ago) and read 1196 times:
HB-IWC...
20 is feasible, 30 is feasible, albeit shaky, but 60? Naaaah... Same with Adam... they're already in a mess with 20 or so. Unless they do some massive operations overhaul on their system, even if all this is feasible, they won't make it under their current system, they'll simply grind to a halt.
We know its obvious that as things stand for the moment, these fleet plans are near impossible to put into reality.
Btw, -GZI was in good shape yesterday!
Mandala499
When losing situational awareness, pray Cumulus Granitus isn't nearby !
HB-IWC From Greece, joined Sep 2000, 3907 posts, RR: 78 Reply 16, posted (3 years 3 days 22 hours ago) and read 1139 times:
Quoting Mandala499 (Reply 14): Same with Adam... they're already in a mess with 20 or so. Unless they do some massive operations overhaul on their system, even if all this is feasible, they won't make it under their current system, they'll simply grind to a halt
Well, according to the airline's CEO the focus of massive future growth will be on the domestic sectors. International expansion seems to be firmly off the table with the exception of a CGK-KUL rotation which is expected to be added for the summer 2007 schedules. CGK-SIN has been performing poorly and the plans for a third daily roundtrip have vanished. Even the evening roundtrip is often cancelled because of low loads. No more talk about opening routes to BKK, HKG, PER or any other international gateways.
So Adam is planning to further flood the domestic network with additional capacity and I don't really know where they are planning to do it. I guess Medan could still take some extra seats as well as the Eastern provinces, but Java is pretty saturated as it is.
I don't know about Lion's plans for the deployment of the B739ER capacity but looking at their abysmal record for regional international flights, I would presume that not a lot of international expansion is on the cards there either, so most of the additional capacity is also bound to end of in the domestic system. Are they planning to give away the tickets for free or what?
Quoting Ryanair!!! (Reply 15): These number of frames, is it a confirmed order?
Who knows? The PR machines have been spinning the message so fanatically that nobody has really been able to keep track of the real message. As far as I know of the 60 B739ERs for Lion, 30 are supposed to be firm, while of 30 A320s for Adam, 6 are supposed to be leased whereas 24 others which were supposed to come straight from Airbus have so far not been firmed.
Maybe PanAM_DC10 can shed some light on the exact status of these orders.
Well, she should be, because she is bound to leave the fleet in a while. Overall, I find the cabin comfort on the GZ* B734s rather limited. Business class has horrible seats. Nothing beats GWK/L/M/N/O/P/Q as well as GGA/C/D/E/F/G/N/O/P/Q/R, all of which were originally delivered to GA and have far superior interiors compared to the others.
Mandala499 From Indonesia, joined Aug 2001, 4535 posts, RR: 60 Reply 17, posted (3 years 3 days 19 hours ago) and read 1100 times:
Domestic? Well, that is the worrying part. Original estimates (2002-3) are that these airlines will need massive reinvestment in 2007-8... those that don't, won't live to see 2010 unless they're niche players (eg: Express).
Market demand aside, the infrastructure is playing catch up... there are signs that even newly opened Padang and the new terminal in Palembang as well as a few other places already need expansion less than 12 months after they were opened.
Medan needs the extra seats, but accomodating that will be dependent on the new Medan Airport completion (or even commencement) schedule... There's no more space there.
One thing to watch out for is the new terminal and runway in Makassar. This is the only "massive" investment that will can realistically be finished by 2010. However, the question remains... where the hell are they going to park all these planes? Furthermore, there are no plans for new maintenance bases, the current ones are already clogged up.
Adam will try the eastern provinces to beat Batavia, who stole an early lead, then a few "questionable" maintenance incidents on the 732 have pointed at sabotage by none other than the current users of T1C gates 5 - 7! But this is not an official accusation yet.
If Adam and Lion plan to expand to the east, the market "is there", BUT, the infrastructure is nowhere near adequate. Sorong and Manokwari can only accomodate 732s, even Manokwari has a weight restriction for that. Sorong can't take the 733 or larger. Biak has no market, Timika is the only one with a strong runway and a market. The only regional govt. initiative for better air transport link is with Merauke, but then, the distances involved is simply... "frightening" to the domestic airlines.
You can forget the South East... the only airport there that can handle anything bigger than a 732 is Kupang...
Pontianak's expansion is long overdue, and its plans are still being finalized with no concrete timetable for that. Banjarmasin can surely take more seats, but unless you got a new terminal, forget it! I just left that place yesterday and the terminal was a joke in terms of capacity. The new terminal plans according to locals are a long way to go as local strongmen are killing each other to get the deal and is nowhere near being settled.
So, from an operational standpoint, it's already "impossible" for Adam and Lion's plans to be accomodated on the domestic front. I place my money on carriers who try and have somehow succeeded in establishing their niches, like Sriwijaya and Batavia... because they can decentralize using their current market base outside Jakarta... Adam only wins in the numbers, there's no customer loyalty, Lion is better on that front, and seems to be the only one apart from Garuda that has enough marketing presence to cover the whole nation.
The only way to partially accomodate is to decentralize out of Jakarta, but that'll eat to their Jakarta loads...
So, HB-IWC, add the above with your views on market demand and what do we get? An impending disaster perhaps?
-GZI's condition was good, but yes, the seats... even in economy one can feel the difference to the GW*... and that extra rear galley compartment ahead of the rear right toilet surely costs some $$$ in lost revenue! Biz class seats? Heck they looked like they were taken out of a museum for GA's standard.
Mandala499
When losing situational awareness, pray Cumulus Granitus isn't nearby !
Sponsor Message: 
From Australia, joined Aug 2000, 3078 posts, 
From Indonesia, joined Feb 2006, 256 posts, 
From Greece, joined Sep 2000, 3907 posts, 
From United Kingdom, joined Apr 2006, 2731 posts, 
From United States, joined May 2006, 810 posts, 
From Singapore, joined Mar 2002, 4290 posts, 
Printer friendly format 
