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Saturday, August 4, 2012

Pacific Royale CEO resigns

Despite much news coverage for startup Pacific Royale over the 12 months, it appears that the carrier continues to suffer from problems. The latest is that the CEO, Samudra Sukardi, has resigned as per 1 August.

Samudra Sukardi's resignation was covered by Kontan, and cites that the Sukardi's term was only for the startup phase, and now that the airline is flying, it was time for him to step aside. Another reason cited was that no agreement had been reached about extending his contract.

While the official reason looks kinda iffy but reasonable, I suspect there is a lot more to the story than the airline is willing to admit.

Following the story of the airline through various sources, a gloomy picture emerged. Hence I think, the CEO was asked to leave... if only several of his 'henchmen' would leave too!

Several sources cited internal corruption as the major problem for this startup, whose funding has already been commented as inadequate to establish itself in Indonesia's competitive environment by several analysts.

There seems to be lack of transparency by the company too when it comes to the attempts to lease the A320s it needs to have to complete the startup phase. I was approached last year to source several A320s for the airline, but it really never got anywhere as the airline deems the required documentation by the leasing companies as "going naked into the open." (I must say, the documentation requirement is standard!)

The delay in commencement of flights has also made the A320 pilots to threaten a walk-out several months ago, but this was averted by the commencement of the Fokker 50 operations as a "concrete milestone."

The Fokker 50 operations hasn't been a stellar success either. Observers in the field note the low passenger numbers for operations between Surabaya, Semarang and Bandung. Sometimes the passenger count is as low as 4 passengers, and the highest number I got was less than 30 passengers. It does not look good.

To make matters worse, the inaugural Java based operations was marred by a bird strike on the last flight of the day, and subsequent maintenance problems occured, reducing operational continuity. It doesn't help that their sole other aircraft (another F-50) is based in Batam on a totally separate network. Now, that other aircraft is in maintenance, reportedly for "fitting EGPWS", but the pictures reveal that engine maintenance might be needed.

Again, to make matters worse, it is also rumored that the Fokker 50s do not have a parts sourcing contract or 3rd party maintenance support. One source close to the Ministry of Transportation said that Pacific Royale at one stage even claimed that Fokker Air Services in Singapore had closed shop (while other Fokker users here still use them!).

The dubious maintenance questions and allegations do not stop there. The first two Fokker 50s are ex Ethiopian Airlines, and somehow managed to be registered in Indonesia without the mandatory HF radios. Stories on what happened when the Ministry of Transport realized this had slipped, was rather bizarre, in that the airline simply cannibalized an HF radio from another aircraft and put it on, without obtaining a Supplemental Type Certification required for the modification.

Despite all this, there are some good news still. It is reported that they have finally secured their first A320 (but delivery is as usual, postponed). They also have received their 3rd Fokker 50, PK-PRC, interestingly, on 1 August, the day the CEO resigned.
Pacific Royale's third Fokker 50 on arrival at Jakarta's Halim
Airport on 1 August 2012 (Photo: Bintang Sakti)
I have grave concerns regarding the timing and the public version of the reason for the CEO's resignation. If you hear the stuff I hear, in which I gave just a snippet of it, wouldn't you? Now if this isn't the Chairman "cleaning out the house" at Pacific Royale, then perhaps the end IS near...