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Sunday, May 22, 2011

The Merpati question: How do you rescuscitate a dead pigeon?

Indonesia's two state owned carriers are poles apart. Whilst Garuda is rapidly reducing its losses whilst undergoing a major turnaround effort and an IPO, it's sibling, Merpati, continues its slide into doom. There appears to be no end to Merpati's slow death as no one is willing to put it into a major turnaround like Garuda, and no one is willing to bravely say enough is enough.

Merpati's managements' public comments are nothing short of laughable or clueless. In an article at Detik.com (link to article) in March, the CEO complained in a parliamentary hearing on the DPR's 6th commission (covering transportation and state-owned enterprises). There, he complained about several things:
  1. He felt that Merpati's business was being affected by Garuda's LCC arm, Citilink. He stated that Citilink should be abolished, "There is Merpati, why is Merpati allowed to be poked around? Both are owned by the government and the money made goes back to the government anyways!"
  2. He felt that Citilink should not be considered at all as it operates under Garuda's AOC. "If it has its own AOC, then we can talk!"
  3. He went further to attack LCCs. According to him, the LCC concept has been violated by airlines in Indonesia and that the regulations must be changed for a more level playing field. "Look at Air Asia. One should look and ask if any regulations have been violated. (If not, then) The regulations should be reviewed. There is no way for anyone to operate the A320 profitably on short haul!"

So, whilst he was attacking the LCC operations, he then stated, "Merpati is going aiming to be a premium carrier with full services."

I personally wonder how the CEO selection process was made.

I leave it to you all to judge based on the following:
  • Citilink and Merpati, compete on 2 routes. Jakarta-Surabaya with Citilink 6x daily (Merpati 2x weekly), Jakarta-Makassar, and Jakarta-Denpasar with Citilink 1x daily (Merpati 4x weekly).
  • A320 short haul operations can be profitable. Indonesia Air Asia posted a massive leap in profits for 2010, and is the country's largest A320 operator, and also the most profitable carrier on a per-aircraft basis.

Let me end this short rant with the question and a choice of answers:
"How do you resuscitate a dead pigeon?"
  1. No need, cut it's head off and end it's misery?
  2. Use a defibrillator for an elephant?
  3. Shove a cyanide pill down it's beak?
Haven't we had enough of shoving our tax Rupiahs for the dead pigeon?
The story continues at The Merpati Question Part 2: Predators vs Pigeons

(Thanks to Riazy for the corrections on the competing routes!)

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