Confidence in the Midst of an Airline Disaster
Executive Summary
Three days before the new year 2015, an Indonesian-Malaysian aircraft lost contact halfway between Surabaya, Indonesia’s second largest city, and Singapore, a two-hour flight. AirAsia is a low-cost airline owned by Tony Fernandes, a successful Malaysian airline businessman who developed the airline in the early 2000. Indonesia AirAsia is a joint venture between AirAsia with several parties in Indonesia, but remains under the leadership of Tony Fernandes.
Despite the ownership of the plane, the Indonesian government showed its resolve in finding and recovering the victims and the aircraft.The search and rescue team started the mission shortly after the news was announced. The team was enlarged on the second day, involving numerous aircraft and ships from the National SAR Agency (BASARNAS), as well as from the Armed Forces. Other countries also lent their help in the search and recovery mission. With systematic effort and a bit of luck, the team found debris from the aircraft on the third day after it lost contact, which led it to find victims, the tail of the aircraft, the black box and many other parts of the aircraft. In fact, the team finally also discovered the body of the aircraft.
The strong resolve of the administration significantly increased people’s confidence in the new government. The lost aircraft was found relatively quickly compared to previous disasters, reflecting how efficiently the government identified the problem and tried to find a solution. The endorsement of the people has helped propel the new government to a level that will be beneficial in undertaking new programs.
The trade balance in November 2014 once again registered a deficit. Exports fell after an increase in October. In November 2014 exports reached a level of $13.62 billion, down from $15.35 billion in October 2014, or a decline of 11.29%. Imports also declined, from $15.33 billion in October 2014 to $14.04 billion in November 2014, a decline of 8.39%, bringing the total deficit for the month to $426 million.
In the mean time, monthly inflation in December 2014 was higher than expected. Even though inflation in November hit 1.50% (despite the announcement of domestic fuel price increase on November 18, 2014) the adjustment for many products from the change in domestic fuel prices continued in December 2014. However, with the belief that the inflation number was related to the domestic fuel price increase, Bank Indonesia decided to keep the benchmark rate constant at 7.75% at its meeting in January 2015.
The Jokowi Presidency also announced the fixing of the oil subsidy, which led to the announcements of the reduction in the domestic fuel price.
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