The capability to manage income and having sufficient knowledge of flight route are the two pivotal things in airline industry. Income has to be managed as efficient as possible in order to go up against economic turbulence. Hence, the Chief Financial Officer (CFO) become crucial as they should be wise in cost management and they bear the responsibility to capitalize any opportunities for the sake of the company.
The CFO Citilink Indonesia Mega Satria has already proven that he is more than adequate to meet these important demands. He has contributed to Citilink’s positive trend of income within three years since its establishment. In 2015, Citilink Indonesia became an airline company with US$ 470 million of income. In addition, the passenger numbers has increased three times from 2012 until 2015. As a low-cost carrier, Citilink has 22 flight schedules to 27 cities across Indonesia every day. They also offer international flights to China, Saudi Arabia, and Timor Leste.
In order to earn such achievements, the company had to struggle and overcome all kind of business obstacles. The dynamic world economy situation greatly affects the domestic economy, resulting in economic turbulence which affects the company. During the CFO Forum which was held by BBS on Thursday (28/7), Mega Satria revealed all the turbulence experiences by airline companies. Mega Satria explained that airline companies often experiencing headwinds, such as when the World Bank said the world economic is slowing up to 2.4 % and the political instability in France, Turkey, and several countries within the Middle East. “The commodity prices are important in determining strategic planning. If the price decrease, it will impact our customer buying power which still greatly depends on export commodities,” he said.
Besides headwinds, Citilink also has to overcome crosswinds in a form of competition against fellow airline companies and other public transportations. “We have a price competition against other airlines,” said Mega Satria, who has tons of financial experiences in Indonesia. In addition, he also gratefully said that they are also experiencing tailwinds which can help the airlines industries in Indonesia. A recent example is the tax amnesty program, which can attract many foreign investors. As a result, it eventually increases the customer buying power, infrastructures development, and the integration with ASEAN.
By becoming integrated with ASEAN, he explains that “It will give positive effects towards airlines industry. The workers’ mobility will be flawless. Besides, we expect that the open sky policy will bring more traffic to local and international flights,” said Mega, who graduated with Master of Business Administration from University of Chicago, United States.
Factors Causing Turbulence
Mega explains that turbulence, especially in airlines, can happen due to several factors. First, the technological advancement that alter competition landscape. “The technological advancement can lead to a decrease of travel agents. Even so, they are still our main competitors due to their bargaining power towards airlines,” he said. Second, the competition among airlines are becoming more intense from day to day and it makes several airlines such as Merpati and Tiger Mandala collapsed.
The third factor is the unpredictability of market. He points out how giant companies such as Nokia and Blackberry has fell from grace. They used to become leading companies in technology industry, but unexpectedly lost their position. Fourth, technology, especially social media, also leads into market transparency. “Social media nowadays can be our main turbulence since our customers can file public complaints through social media,” he adds. Fifth, the fluctuation of fuel prices and Rupiah exchange rate against US Dollar have significant role towards income and cost.
What is the secret behind Citilink Indonesia’s success to anticipate such turbulences? Mega Satria revealed their three secrets. First, superiors become an exemplary towards their subordinates. “The superiors have to be fully committed when facing problems, so the subordinates can follow their steps,” he said. Second, choosing a qualified person to be a manager is crucial. He said “If the leader promoted the wrong person, there is a possibility of turbulence in the future. As a result, the manager will also hire the wrong staffs.” Third step is regarding the strategic implementation. He underlines that the leaders have to make sure that the strategy is working accordingly, from the bottom to the top.
By implementing those steps, Citilink can be prepared for the possibility of turbulence. Therefore, it ensures a significant growth of the company. To maintain and improve its growth, Citilink aims to broaden its flight route to eastern part of Indonesia. “Currently, our domestic flight in Java and Sumatera still dominates the schedules. We intend to schedule flights to eastern region as it will strengthen our position in domestic routes,” he said. Further, he said that Citilink has set a target in 2016 to grow 30% more than the averages of the industries as well as the ambition of increasing the average number of passengers at least by 30% in the next two years.
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