TIGERAIR Mandala announced yesterday that it is throwing in the towel and ceasing operations as of July 1, a decision that was met with regret but not surprise by the Indonesian travel industry.
In a media release, Lee Lik Hsin, group CEO of Tigerair, said: “Mandala’s financial results reflect the challenges that it is facing in the difficult operating environment. The partners in Mandala have jointly come to the conclusion to cease funding the airline’s operations.
“Indonesia remains an important market for us and we will continue to maintain active presence through Tigerair Singapore.”
Tigerair said that pulling the plug on Mandala will enable Tigerair Group to focus on its turnaround strategy, which includes fleet consolidation, strategic alliances and an asset-tight growth model.
Nevertheless Hasiyanna Koestoer, chairman of the Association of the Indonesian Tours and Travel Agencies Jakarta Chapter, said: “Any airline stopping operations always has a negative impact not only immediately on ticketholders and consultants who have placed ticket deposits with the airline, but the travel ecosystem too.
“A stop in operations means seat capacity loss. We all know airline load factors (both domestic and outbound) are high especially during peak season.”
Hasiyanna was also concerned if consumers would trust Mandala should it ever get off the ground again. “Mandala has collapsed before and when it started operations again, it seemed to be on solid ground with Tigerair and (well-known Indonesian business) Saratoga as investors, but (now) this happens,” she said.
Tiger Airways Holdings had acquired a 33 per cent stake in Mandala in January 2012 and upped it to 35.8 per cent September last year, through wholly owned subsidiary Roar Aviation.
Rudiana, board member of The Association of Air Ticketing Companies in Indonesia, said: “We anticipated that Tigerair Mandala would stop operations ever since they closed a number of routes a few months ago.
“However, with the number of airlines stopping operations recently, the Ministry of Transportation needs to take prudent measures in implementing laws on airline operations in Indonesia to protect the customers and travel consultants, who usually are the victims.”
Merpati Nusantara Airlines suspended flights in February (TTG Asia e-Daily, February 4, 2014) and Sky Aviation, in March.
Tigerair Group is providing all affected passengers with a flight transfer where possible or a refund on the ticket, but customers must contact the Mandala or Tigerair call centre by July 31.
