Batavia Air awaits bankruptcy decision

JAKARTA. The fate of privately owned Batavia Air is hanging by a thread after the International Lease Finance Corporation (ILFC) filed a petition to force the carrier into bankruptcy for failing to pay for leased aircraft.

The creditor said that the carrier had yet to pay charges for two leased Airbus A330s.

Batavia Air commercial director Sukirno Sukarna said that things at the airline would come to an immediate halt if the Central Jakarta Court declared it bankrupt on Wednesday.

“We have to wait for the verdict from the court [on Wednesday]. If we are declared bankrupt, we will completely stop operations,” Sukirno said on Tuesday.

“We are still selling tickets to customers as usual.”

Sukirno said that the airline’s management was still trying to settle the debt through negotiations with the ILFC.  

However, he denied that the airline was facing default.

Contacted separately, Transportation Ministry spokesman Bambang S. Ervan confirmed that Batavia was waiting to hear about the mandatory bankruptcy decision.

“As a regulator, we will continue to monitor Batavia Air in every aspect, especially its operations, because we want them to ensure utmost safety standards — the most important thing in aviation,” Bambang said.  

In October, the planned acquisition of PT Metro Batavia, the owner of Batavia Air, by Malaysian based low-cost carrier AirAsia Berhad and its Indonesian partner PT Fersindo Nusaperkasa was officially called off.

In a statement sent to the media, AirAsia Berhad said that the airline had to cancel its plans, as the deal “posed many risks” and “might prompt concerns” among the Malaysian-based company’s shareholders.

 A deal agreed to in July by AirAsia and Fersindo, the owner of a 51 percent stake in Indonesia AirAsia, to buy Batavia Air for US$80 million, was called off due to “cultural differences between the two companies”, according to AirAsia Group CEO Tan Sri Tony Fernandes.

AirAsia signed a memorandum of understanding (MoU) in July with the carrier in a move that was expected to strengthen its foothold in the fiercely competitive budget-airline environment in Indonesia.

Companies have been competing to attract a burgeoning number of air travelers in the archipelago: Transportation Ministry data shows that 68.19 million passengers traveled by plane in 2011.

Striking a deal with Batavia was expected to boost Indonesia AirAsia’s domestic network. Although Indonesia AirAsia is the strongest international player in the country’s low-cost carrier industry, it is known primarily for its foothold on international routes, rather than domestic ones.

Indonesia AirAsia transported only 181,200 passengers, comprising 3 percent of the domestic market, in 2011, much lower than its 3.38 million international passengers, comprising 41.5 percent of the international market.  

In contrast, Batavia Air flies to more than 50 destinations around the country and holds 11.25 percent domestic market share.

The leader in the country’s low-cost carrier industry for domestic travel, however, is Lion Air, which currently holds 41 percent of the market. (Nurfika Osman/ The Jakarta Post)