Measuring the Prospects for the Merger of Citilink and Pelita Air

April 16, 2024, 08.15 AM | Reporter: Muhamad Aghasy Putra

ILUSTRASI. Officers wave to a Citilink plane during its inaugural flight at Dhoho Airport, Kediri, East Java, Friday (5/4/2024). Dhoho Kediri Airport, which was built to international standards and has the longest runway in Indonesia, namely 3,300 meters, started operations with the first flight carried out by Citilink Indonesia airline on the Kediri-Jakarta route. BETWEEN PHOTOS/Prasetia Fauzani/aww.

AVIATION INDUSTRY - JAKARTA. The proposed merger between Citilink and Pelita Air is targeted to be completed by October 2024, pending finalization from the shareholders of both companies.

Aviation analyst, Alvin Lie, expressed his disappointment over the merger, arguing that both airlines have their market characteristics. He also suggested that a reduction in the number of airlines would benefit competitors.

“Both of them already have their market share, if the number of airlines decreases, it will benefit their competitors. They will be ready to seize the market share left behind,” said Alvin in an interview with Kontan on Monday, (15/04).

He also added that if both disappear and a new company is formed, it would require a significant amount of capital and a lengthy operational process.

“It requires a large investment to launch a new brand, then for the positioning & branding of the company in the future. Not to mention all the planes have to be repainted, the process is quite long and I can't imagine how many trillions need to be spent for everything,” Alvin stated.

He also lamented the waste of the positive image both airlines, Pelita Air and Citilink, have built up.

“Then the goodwill and brand value of both Pelita and Citilink, which have been well established over time, are just thrown away, it's very wasteful,” he concluded.