Feb 2, 2013

Indonesia - Bankrupt Batavia to stop service

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Starting today, privately owned Batavia Air will fully halt operations following a Central Jakarta Commercial Court ruling that declared the carrier bankrupt for failing to pay for aircraft it had leased.

“The management [of Batavia Air] accepts the court’s decision and will stop operations starting on January 31,” Batavia Air lawyer Raden Catur Wibowo said in Jakarta on Wednesday.

The International Lease Finance Corporation (ILFC) filed a bankruptcy petition against the carrier after it had failed to pay US$4.68 million for two leased Airbus A330s for three years.

“In the company’s plan, the aircraft were supposed to be used to transport Indonesian pilgrims during the annual haj season. But, the airline was not given slots [by the regulator] to fly to Mecca,” Catur explained.

Both parties had tried to settle the problems, but they failed to find a solution that would have been beneficial for either party.

Based on the 2004 Bankruptcy Law and the court ruling, the company is now being handled by four trustees: Andrea Renhard Sirait, Turman Panggabean, Permata Daulay and Elba Sukmahadi.

In addition, however, Catur said that Batavia had been given the right to appeal within eight days. The airline is still considering whether or not to appeal.

According to the Transportation Ministry, Batavia Air commenced its first operations in the country back in 2002.

The carrier continued to grow from year to year until it operated 33 aircraft, providing service to 64 destinations, including Singapore, Dili, Riyadh, Kuching and Guangzhou, by the end of 2011.

But the company reduced its network to 44 destinations in mid-2012 in a bid to improve business.

“Since this issue had erupted in the media, many lessors had taken back aircraft that Batavia operated. Today, we only have 13 airplanes,” Catur said.

Separately, the Transportation Ministry’s air transportation director general, Herry Bhakti Gumay, said that the contingency plan is set to be implemented starting Thursday to anticipate passengers who already purchased Batavia Air tickets.

“Mandala Air is the first airline that has shown its commitment to help transport Batavia passengers. We will be giving Mandala a route permit so that it can carry the passengers on Batavia’s routes,” Herry said in a press conference.

He said that passengers should not incur any additional costs to alternatively fly with Mandala.

He urged every domestic airline to help transport Batavia passengers and had personally called Lion Air and Sriwijaya Air.

He also said that he had talked to Indonesian Airline Ticketing Association (Astindo) and the association has stopped selling Batavia tickets.

Regarding travel agents that have deposited money to Batavia Air for upcoming travels, the trustees will make the decision on how to solve the problem. 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 have prompted concerns” among the Malaysian-based company’s shareholders.

Nurfika Osman

The Jakarta Post

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