1.3 Billion Rupiah loss in 2013 and bleeding
 

Tigerair Mandala managed to loose 1.3 Billion Rupiah in 2013 and keeps bleeding. Pilots and office staff abandon the sinking ship.

Hi,
are you sure its only 1,3 Billion? Thats about 100k USD, sounds to be not that much...

1,300,000,000 rupiah at 11,000 rupiah to the dollar is $118,181.82

I wouldnt quit just for that.

I think that should have been trillion rupiah, not billion.

TigerAir have previously forecast (Apr 2013) expected losses of SD$30-35 million from TigerAir Mandala in FY14 and FY15.

With Mandala being only 1 of 10 regional operators in Indonesia, sharing 8% of the LCC market, anyone who expects Mandala to have a gloriously profitable future is living in la-la land.

The only question that remains is just how deep the pockets are of the TigerAir owners and financiers.

Every major carrier is losing money in the current low-cost shambles that pervades the airline market at present.
Mandalas future is only guaranteed as long as TigerAir is prepared to keep pouring money into a black hole until they give up.

2014 will be the year of make-or-break for many carriers - and many large ones at that.

Tigerair 2014 outlook gloomy following 3QFY2014 loss. Is there a silver lining in 2015? | CAPA - Centre for Aviation

TigerA320... There's a reason why some people say you can always be a millionaire in Indonesia :)

Correction not billion but trillion
 

It is trillion. You are right. USD4.5 Mil loss per month in 2013 and CEO happy to expand in the domestic market and loss making routes.


Well let me see, Merparti managed to ramp up a 32 trillion rupiah loss in over 35 years and Mandala management tops it with 1.3 trillion in just under 14 months.


Well the question is when Saratoga will pull the plug and the adventure becomes too hot for Tigerair which is also struggling. Sale of 60% in TT in Australia and loss making SE Air to Cebu helped to make the P&L look better but the truth is a different one.


And now a new joint venture in Taiwan with a legacy carrier. Well didn't Air Asia just fail in Japan with a legacy airline??


It all comes down to management and Mandala is a fine example for very bad management. I feel sorry for all the guys out there. No Bali base, no commuting roster, no Captain upgrade, in fact no line training for newly hired pilots!!!

True, ANA and Tony Fernandes didn't share the same philosophy on how to run a LCC, so they decided to part. However, about one month ago, Tony tweeted that he found the perfect new partner for re-entering the Japan market! Will be interesting to see what's going to happen there (and when).

As far as Tiger Mandala is concerned: All the Indo carriers are bleeding now due to the extremely week Rupiah. Because it's election year, this might not get any better until next year.

Rupiah sliding
 

The Rupiah has been sliding for over a year but what mitigation actions have been taken by the management??

Their airfares are incredibly cheap. Booked Surabaya - Singapore return for 490,000 rp which is about $52 SGD. The taxi fare to and from to the airport in Singapore costs me $60 SGD! No wonder they can't make any money! LOL!

Indonesian Budget Carriers Paring Flights as Rising Expenses Crimp Profitability
 

Indonesian Budget Carriers Paring Flights as Rising Expenses Crimp Profitability

Turbulence ahead as depreciating rupiah plays havoc on low-cost carriers

After Merpati Nusantara Airlines shut its operations earlier this week, Indonesia’s other budget carriers, including Tigerair Mandala and Indonesia AirAsia, plan to follow suit by halting some domestic flights. Airline operators place part of the blame for the string of temporary suspensions on the depreciating rupiah.

Tigerair Mandala, partly controlled by Singapore’s Tigerair, will suspend 11 of its domestic and international routes due to ballooning operational costs. The carrier’s route from Surabaya to Hong Kong will be the first, scheduled to close on Monday.

“These suspensions are temporary. We plan to open these routes again in April or during peak season,” Lucas Suryanata, Tigerair’s public relations manager, told Jakarta Globe on Thursday.

The cut will affect routes linking Jakarta to Pekanbaru and Jakarta to Singapore.

Tigerair currently operates flights from Jakarta to Pekanbaru twice daily, but come Feb. 18, those numbers will dwindle to one flight a day. The airline’s route from Jakarta to Singapore will also be slashed to four flights daily, or 28 weekly, starting on March 3. The airline currently offers up to nine flights a day from Jakarta to Singapore.

Tigerair Mandala, formerly known as Mandala, offers low-cost flights to several destinations around Asia. The company was acquired by Singapore-based Tigerair group last year, which resulted in its rebranding.

Indonesia AirAsia (IAA) — the subsidiary of Asia’s largest budget carrier, AirAsia Group — began closing its Jakarta to Makassar route on Feb. 1, partly due to rising costs as the rupiah weakened, IAA’s chief operat ing officer Ridzki Kramadibrata said.

Fuel accounts for up to 50 percent of AirAsia’s operational costs.

The depreciating rupiah, rising jet fuel prices and the current low season are the main factors behind the route closures, according to Tigerair’s Lucas.

Many airline operators are struggling with the weakening currency because while their revenues are in rupiah, most of their expenses are in dollars.

The rupiah fell by 26 percent in 2013 and has only strengthened 0.2 percent so far this year, according to Bank Indonesia.

Jet fuel also accounts for approximately half of Tigerair Mandala’s operational budget, Lucas said.

Despite rising costs, Tigerair chose to maintain its budget prices at the cost of fewer routes.

“Some companies reduce quality or increase fares, but we can’t do that,” Lucas added.

The Indonesia National Air Carrier Association (Inaca) has urged the Transportation Ministry to promptly increase the surcharge of airline tickets to cope with rising costs.

“We suggested to adjust the tariff’s upper cap to 20 percent, as jet fuel prices and other dollar-denominated components, such as insurance, leasing, spare parts are also increasing,” Inaca’s chief Arif Wibowo explained to Investor Daily on Wednesday.

Transportation Ministry regulations issued in 2010 state that surcharges will be adjusted once a year, or upon a significant price increase in three consecutive months.

Herry Bakti Gumay, director general of air transportation at the Transportation Ministry, said his office would approve the new surcharge at the end of the month.

“The government gave its commitment that it would approve the new airline surcharge. But we are also waiting for [Transportation] Ministry regulations that will adjust the base tariff,” Herry told the Globe in a phone interview.

Inaca’s Arif — who is also president director of Citilink, one of the country’s budget carriers — insists airline tariffs must be dynamic to follow the tourism industry’s low- and peak seasons.

Debt-saddled Merpati Nusantara suspended all flights this week as falling revenue continued to push the struggling state-owned airline closer to bankruptcy. News of the suspension left many travelers stranded at remote airports across Indonesia.

JG..February 6, 2014