Jakarta probes AirAsia’s Batavia Air buy over monopoly fears
JAKARTA, July 31 — Indonesia's business regulators want details from AirAsia Bhd and PT Fersindo Nusaperkasa about their plan to take a controlling stake in Batavia Air to ensure anti-competition rules are not flouted, The Jakarta Post reported today.
The antimonopoly agency fears that the acquisition by the owners of Indonesia AirAsia (IAA) would create a business entity that would control more than 50 per cent of the domestic market, which is in violation of Indonesia's 1999 Law on unlawful business practices.
“We will annul the acquisition if it has the potential to stop other carriers from growing in the aviation industry,” KPPU head Tadjuddin Noer Said was reported of saying about the US$80 million (RM252 million) deal to buy into Metro Batavia, which owns Batavia Air.
The paper said there is no official record on IAA’s number of passengers for domestic flights as the airline predominantly serves international routes with domestic interconnections. Batavia Air domestic route passengers reached 6.75 million, or equals to 11.25 per cent of the domestic share.
Tadjuddin said the agency would look into the composition of ownership in the parent companies of IAA, in which 49 per cent is controlled by AirAsia and 51 per cent by Jakarta-based Fersindo.
He urged AirAsia and Fersindo to disclose the details of ownership within the companies in 30 days so as to allowing the agency to precisely calculate their control over the domestic market. “If they fail to notify the KPPU, they will be fined Rp 1 billion [RM334,059] a day,” Tadjuddin said.
In an agreement signed last week, AirAsia and Fersindo would purchase 76 per cent of Batavia sometime this year while the remainder would be acquired in the second quarter of next year.
Tadjuddin said the KPPU wanted to see if the Batavia acquisition was prompted by the possibility of the company going bankrupt or driven by AirAsia’s intention to expand its Indonesian presence ahead of ASEAN’s open sky policy in 2015.
“We are afraid that AirAsia Berhad is using Batavia Air as a vehicle to control our market ahead of the open sky policy. We can say the acquisition process is just camouflage, which would not be right,” Tadjuddin told reporters on Monday.
Tadjuddin said that such a practice would endanger business competition in the country’s aviation industry, which would kill off other domestic carriers.
“It would create an unhealthy environment in the business, such as in pricing or creating what is called a cartel,” he was quoted as saying by the English daily.
Indonesia's Transportation Ministry’s air transportation director, Djoko Murjatmodjo, said the ministry had recently received a report from Batavia Air on its plan to sell their shares to the two companies.
But he told The Jakarta Post that the company had yet to further elaborate on how many of its shares would be sold to the Malaysian-based company and how many to its Indonesia unit, giving an unclear message to the government.
Similar to the KPPU, he said the ministry would look at the composition of shareholders of Fersindo as well as the acquisition process of Batavia Air.
“The KPPU has the right to annul the acquisition if Indonesia is not the majority shareholder,” Djoko said.
Previously, the ministry’s air transportation director general, Herry Bhakti Gumay, said the ministry would not hesitate to “revoke Batavia Air’s SIUAU [flight permit]” if the acquisition did not comply with Indonesian ownership rules.
The Batavia acquisition comes hot on the heels of Tiger Airway’s takeover of Mandala Air earlier this year.
Fersindo Nusaperkasa president director Dharmadi was not available for comment when contacted by The Jakarta Post.