Indonesian airlines PT Mandala to shut operations

Indonesian airlines PT Mandala to shut operations

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Indonesia’s low-cost carrier PT Mandala to clip its wings permanently.

Indonesia budget carrier PT Mandala Airlines that operates under parent company – Tigerair Mandala – announced its decision to cease operations from July 1, 2014. The decision comes after the cash strapped airline has been struggling to keep itself afloat in the competitive aviation market.

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Jusman Syafii Djamal, the chairman of Mandala’s board of commissioners in a statement said that the firm was no longer able to bear the pressure in front of the highly competitive aviation industry with rising operational costs. Djamal added, “We have looked at every angle to make this work, and have also discussed with other potential strategic and financial investors.”

The chairman added that apart from the problem of overcapacity which has put a pressure on the yields, the constant weakening of the Rupiah since the beginning of 2013 has increased the operational costs.  Attempts by Mandala to restructure have been in vain and its operational costs have not turned around.

This is not the first time Mandala has faced the possibility of a shutdown, back in January 2011, the airline was grounded due to heavy debt. However, in April 2012, it re-entered the market as Tigerair Mandala after a complete financial restructuring.

The low-cost airline industry in Indonesia has become increasingly competitive with a growing number of airlines and a constantly expanding market.

Photo Credits: Australianaviation