Jakarta. The Indonesian government has revoked the Air Operator Certificates of six airlines for failing to fulfill their minimum aircraft requirements, while giving extensions to 13 others to fulfill their capital requirements, the transport minister said on Wednesday.

Minister Ignasius Jonan named Asco Nusa Air, Air Maleo, Manunggal Air Service, Nusantara Buana Air, Survai Udara Penas and Jatayu Air as the six airlines to have their certificates revoked.

An Air Operator Certificate, or AOC, essentially gives aviation companies the green light to operate commercially.

“They did not fulfill the requirements needed [to maintain an AOC] after we had extended the deadline from June 30 to July 31,” he told reporters.

The airlines are eligible to reapply for operational permits next month if all stipulations are fulfilled. Should they fail to make a new AOC proposal, their aviation business license, or SIUP, would be declared invalid.

The ministry also gave extensions to 13 airlines that had not reached its minimum capital requirements, giving them time to acquire more funds by Sept. 30.

The government will thoroughly review the airlines’ business plans, operations and feasibility if they fail to meet the deadline, the minister said.

“If by Sept. 30, there are still airlines with negative equity, not only we will review them but we will also forbid them to fly. The review will be conducted within four months so the final decision will be announced in October,” Jonan said.

AirAsia Indonesia, a local unit of Malaysia-based low cost carrier AirAsia Berhad, is among the 13 being closely monitored by the ministry.

Seperately, aviation observer Arista Atmadjati applauded the Transport Ministry’s decision to revoke the permits of the six troubled airlines, saying it showed the the ministry’s commitment to implement strict regulations.

He also applauded the move to grant a deadline extension for air carriers to meet the their capital requirements as sufficient capital is crucial for aircraft maintenance and operations.

“Revoking their permits will interfere with the industry dynamics, especially if big airlines like AirAsia are also included on the list,” Arista said.

GlobeAsia

The post Transport Ministry Grounds Six Airlines, Puts 13 on Notice appeared first on The Jakarta Globe.

Jakarta. The Transport Ministry has granted a two-month deadline extension to Indonesia AirAsia, the local unit of Malaysian budget airline AirAsia Berhad, allowing more time for the company to fulfill its capital requirement, but barring it from opening new routes.

Batik Air, the full service airline of Lion Group, on the other hand, had complied with the requirement, Transport Minister Ignatius Jonan said on Wednesday.

The ministry last month instructed 13 airlines to turn around their negative equity  ̶  when value of a company’s assets drop to below its outstanding debt, requiring the stakeholders to inject more capital or turning some of their debt into equity  ̶  in their balance sheet by Jul. 31.

“[AirAsia] has submitted a letter stating its ability to fulfill the requirement, so we gave them more time,” Jonan said, adding that several other air carriers also secured extensions.

The ministry had reviewed the financial reports of all Indonesian airlines as part of safety crackdown after an Indonesia AirAsia aircraft crashed into the Java Sea on Dec. 28, killing all 162 people on board.

According to a ministerial regulation officials say is imperative for maintaining safety standards in Indonesia’s aviation industry, airlines with total a capacity of 70 seats or more are required to have paid-in capital of at least Rp 500 billion ($37 million).

Indonesia AirAsia president director Sunu Widyatmoko assured that the budget carrier is committed to securing approval for a capital injection from stakeholders by Sep. 30.

AirAsia Berhad, which holds a 49 percent stake in the Indonesian unit, is reportedly seeking to raise $200 million from a convertible bonds issuance in the near future.

Still, Jonan said that the ministry would refuse any application from the airline to fly new routes until Sept. 30, calling the decision “their sanction.”

Batik Air managed to escape the sanction, however, by converting some of their debt into shares, enabling them to meet the capital requirement, Jonan said.

GlobeAsia

The post Indonesia AirAsia Stays Aloft Thanks to Govt Extension on Capital Requirement appeared first on The Jakarta Globe.