It's not that dramatic in terms of the magnitude, the biggest factor is the sharp fall in oil prices.

Andrew Herdman

Categorized in : Industrials

There is not so much a shortage of pilots as a rising cost of attracting and retaining the pilots you need, particularly the experienced ones, there is a bidding war going on.

Now capacity is growing at about the same or even edging slightly ahead, so load factors have stabilized. That is a warning sign to keep an eye on capacity.

Further investment is needed in infrastructure, many of the airports in Indonesia are dealing with congestion well beyond their design capacity. Some of the smaller airports, and this most recent tragedy involved short haul service between two remote airports in inhospitable terrain in Papua -- airports in that terrain need upgrading of navigation aids and other operational enhancements.

Historically what happened is strong hub-to-hub, but when the market grows, it makes sense to come up with direct service to non-hub cities.

In Asia, you've still got a lot of low-income countries where price is a major factor, it's a challenge for full-service carriers in Asia to restructure and be more efficient to narrow that productivity and cost gap with budget carriers.

There is a lot of work to be done to address, identify deficiencies and to strengthen regulatory oversight and that's true in Indonesia and it's true in a number of other markets.

What we have to do is take care of the institutions and people's livelihoods, the soft capital, so that we can restart effectively in a timely way when the time comes.