Will Mandala Airlines take off again?


JAKARTA (eTN) – Indonesia’s air transport is on the verge of losing another airline. Mandala Airlines, the country’s sixth largest carrier, grounded all of its aircraft a week ago as the carrier tries to settle its spiraling debt. The airline’s management indicated that it has negotiated with new investors for a cash injection. Among the shareholders of Mandala are IndiGO Partners, a US group of investors which entered into the capital in 2006. IndiGO is also present in the capital of low-cost carrier Tiger Airways in Singapore and in US budget airline, Spirit Airways.

Mandala is a relatively small player compared to other Indonesian carriers. It had a fleet of only five Airbus A320 serving 13 airports in Indonesia and on regional routes (Hong Kong, Macau, and Singapore). According to OAG data on airline capacity, Mandala represents only 3% of frequencies and capacities in the country. If the airline’s efforts to attract new investors pay off, it still wants to double its fleet of Airbus to make the airline economically more viable. The government gave 45 days to the airline to achieve its restructuring before having its operating license suspended. More should be learned on February 1 about Mandala’s future, following a meeting between the airline’s management and its creditors.

In an official communication, Diono Nurjadin, Mandala CEO, hopes to announce the arrival of a new investor by early February. It could be possible that the airline could also adopt the Tiger Airways brand and look for synergies with other Tiger subisidiaries in Singapore, Australia, and the Philippines. The potential for airlines in Indonesia still remains very attractive due to the huge population size (235 million) and the rapid development of its middle class.

Mandala was among the first airlines in Indonesia to have escaped from the EU ban following concerns on air safety in the country. The last spectacular airline’s bankruptcy was Adam Air in 2008, a major carrier with a fleet of 22 aircraft. The airline had its license revoked following a string of accidents between 2006 and 2008.