Citilink will separate from Garuda Indonesia

Garuda Indonesia plans to spin off (separation) of its strategic business units, Citilink. Spin-off will be done after the initial public offering (IPO) which scheduled on fourth quarter 2010.

"The most fast of the spin-off is in the second half of next year. If IPO will done this year, it takes approximately 3-6 months to conduct activities such as spin-off," said Director of Strategic and Technology Garuda Indonesia, Elisa Lumbantoruan.

According to Elisa, the spin-off was conducted aiming to isolate the resources side, as well as from the operational side of the two airlines. This is because the working culture of the two airlines will be very different due to class differences of the two airlines. Garuda Indonesia will go into Full Service class, while Citilink join in No-Frills or Low Cost Carrier (LCC) class. "In addition, the spin-off also can simplify the management of capital. For example make it easier to find partners or investors”, Elisa explained.

Citilink’s spin off has been scheduled since 2009. However. until now the spin off plan is intercept by a number of requirements in order to get SIUP (Aviation Business License) from the Ministry of Transportation, among them are the business plan and the procurement of the fleet. Since not get the SIUP yet, currently Citilink still become one with Garuda Indonesia. Citilink have the same flight number with Garuda Indonesia, which begins with the letters GA.

Mandala Airlines lowering the service to minimum service (no frills)

PT Mandala Airlines is lowering the service type from medium service to minimum service (no frills). Director General of Civil Aviation Ministry of Communications, Herry Bakti S Gumay ensure that Mandala Airlines already reported the service changes on July 13, 2010 to government.

"Mandala Airlines decided to reduce its services. After they explain the reason, we can accept. But they must be consistent with the request, should not have asked for no frills but still apply a medium rate," said Herry Bhakti. After obtaining approval to reduce the type of service, as of July 14, 2010, Mandala Airlines should reduce the charge for groups of no frills.

According to Minister of Communications Decree No. KM 26/2010 concerning Tariff Setting Limits On Economy Class aircraft, no frills airlines are only allowed to apply 85% tariff from upper limit tariff, while for medium services allowed to apply of 90%.

Herry Bhakti said, when the rules of the upper limit tariff applied on June 1, 2010, the government gives the transition and adjustment for budget airlines to follow the rules of the upper limit of the tariff. So even found the airlines violate the tariff, Government only admonished the concerned airlines not to repeat the same thing.

"At the time when this rules was imposed the airline company such as Lion Air, Travel Express Aviation, Merpati Nusantara Airlines, Mandala Airlines and Metro Batavia has break the rules.But we only reprimanded and not impose sanctions because it is still in transition stage. But from now on if there is another violation, we must drop the sanctions," said Herry Bhakti.

The sanction in accordance with regulations ranging from a reduction of frequency, freezing the flight routes, and postpone of licensing of new routes. "We also will not allow another airline to change the type of service than it has been reported. The airline must provide such services at least until six months, a new can change the type of service," he concluded.