Adam Air, (incorporated as PT. Adam SkyConnection Airlines), was a privately owned airline based in Jakarta, Indonesia. It operated scheduled domestic services to over 20 cities and international services to Penang and Singapore. Its main base was Soekarno-Hatta International Airport, Jakarta.
Although sometimes referred to as a low-cost carrier, it marketed itself as an airline which straddles between low-cost and traditional carriers by offering on-board service with meals, but at competitive prices, similar to the model adopted by Singapore-based Valuair. Prior to the crash of flight 574, it was the fastest growing low-cost carrier in Indonesia.
The airline was established in 2004 and started operations on 19 December 2003 with 2 Boeing 737 aircraft leased from GE Commercial Aviation Services. It is named after Adam Adhitya Suherman, son of Sandra Ang.
Recently, Adam Air has been involved in talks with multiple private investors, including discussions about the sale of a 20% stake to Qantas, a takeover bid from private equity fund Texas Pacific Group, and a planned initial public offering in Singapore. However, international outside interest has been terminated due to the crash of flight 574.
Indonesian investment firm PT Bhakti Investama expressed an interest in acquiring Adam Air. The company already owned a stake in Indonesian Air Transport, and president Hary Djaja says that "Given our experience with IAT, which has an excellent safety record, we're certain that we will be able to create positive synergies and improve the way Adam Air is run,". Adam Air ultimately sold a fifty percent stake of itself to PT Bhakti Investama.
Following the crash of Adam Air Flight 292 in Batam, PT Bhakti Investama and a business consortium, Bright Star Perkasa which together own 50 percent shares in Adam Air plan to bail out on their investments and sell their shares back to the carrier's founders, Suherman and Sandra Ang. Henry Suparman, investor relations official at Bhakti Investama did not cite any specific safety incident at Adam Air but said that after nearly one year of investing in Adam Air, Bhakti has not seen any significant progress in the airline's handling of safety issues.
On January 1 2007, air traffic controllers lost contact with flight 574 en route from Surabaya (SUB) to Manado (MDC). The aircraft, a Boeing 737-400 with the registration PK-KKW, had 96 passengers and 6 crew. On January 10, parts of the aircraft's tail stabilizer were found 300m offshore.
The flight recorders and suspected debris have been located, but may not be recovered due to a dispute between Adam Air and the Indonesian Government over who should pay recovery costs.
Adam Adhitya Suherman, founder of the family-run airline, has personally denied these accusations, and has said that maintenance costs "up 40 percent of our total operational costs,". However, this contradicts an earlier statement by Adam Air which said that 60% of its total income is spent on fuel costs. For both of these to be simultaneously true, the company would have to be making a substantial loss, since fuel and maintenance alone would be taking up the entirety of Adam Air's income between them.
After the incident in which an aircraft with 145 people on board was lost for hours, eventually making an emergency landing in West Sumba, East Nusa Tenggara, some 525 kilometers away from its intended destination, the pilots blamed a malfunctioning navigation system. Adam Air claimed the equipment to be in good working order, and had the pilots arrested on charges of endangering passenger safety. Immediately after the incident, the Directorate General of Air Communications (DGAC) sent instructions to Adam Air to repair the faulty system. Adam Air would then be required to conduct a total of 13 test flights with DGAC inspectors in board before the aircraft could be returned to commercial service. But Adam Air instead left behind a team from the National Transportation Safety Committee (KNKT), who they were supposed to transport to the site, and sent only their own engineers. According to Adam Air, they repaired the fault, and the aircraft was immediately returned to service without any inspection. Iksan Tatang, director general of air transportation, and therefore the country's top aviation official, said at the time the incident was "a serious violation", and promised a full investigation. However, there is no sign of the investigation's findings on the public record, and it is unclear whether the investigation took place at all. Critics say Adam Air used its political connections to get itself out of trouble.
When asked by Tempo magazine what was responsible for the January Adam Air accident, chief executive officer Suherman said: "It was a weather problem. Everything was okay when the plane took off, except for the X factor. We are not God." However, the Asia Times says that due to corruption the real cause may never be known.
In May 2005 17 Adam Air pilots decided to resign due to poor navigational systems with which they were forced to fly. The airline sued all of them since their contract length had not been fulfilled. Of note is the assertion that Adam Air is not attempting to claim for damage caused by the pilots' public accusations of poor safety standards.
On February 21 2007 it was reporteded that thirteen Adam Air employees, as well as an employee of airport operator PT Angkasa Pura, working at Soekarno-Hatta International Airport had been arrested for fraudulent data manipulation. The scheme involved manipulating passenger data to show passengers as leaving the country. This meant that they were automatically charged duty at 30,000 Rupiah each, when in reality they owed none. The money was then split between the fourteen staff members. A computer from the check-in desk, as well as passenger tickets and lists, have been seized.
It was reported on June 28, 2007, that Adam Air would escape closure and has been upgraded one rank in safety rating, to the middle tier. The airlines that have lost their licenses are Jatayu Gelang Sejahtera, Aviasi Upataraksa, Alfa Trans Dirgantara and Prodexim and the airlines that have been grounded pending improvements and facing potential licence revokation are Germania Trisila Air, Atlas Delta Setia, Survey Udara Penas, Kura-kura Aviation and SMAC.
As reported on local news, Adam Air reduced many of its flights. Adam Air decreased its frequencies into only several flights departing both from Jakarta Airport and Surabaya Airport. Adam Air has now rejected any booking.
On 16 March 2008, Adam Air was given 21 days by the Indonesian government to decide whether to close down after safety concerns prompted an investment group to unload its 50 percent stake in the airline. The following day, the president of Adam Air announced that more than half of the fleet had been seized after the airline defaulted on payments.
"Out of 22 planes, now we only have 10 because 12 of them have been declared in default. The other 10 have been declared in default as well, but I'm still trying to work out a way to restructure the payments," Adam Suherman was quoted as saying.
18 March 2008, the Indonesian government suspended the airline´s Air Operator Certificate. The airline was not allowed to fly and had three months to show safety improvements. On 18 June 2008 the Indonesian authorities definitively pulled Adam Air´s AOC.
However, the company has been in financial trouble, even before the government's decision to shut it down, mostly due to mismanagement. The company's owner (Sandra Ang) has been allegedly embezzling the company's money. The financial lost from the embezzlement is reportedly amounting to Rp 2.1 trillion (approximately US$ 210 million). In August 12, 2008, the Indonesian police name Sandra Ang as a suspect for money embezzlement. She has also been barred from leaving the country by the immigration. See http://www.detiknews.com/read/2008/08/12/222342/987501/10/ditetapkan-jadi-tersangka-komisaris-adam-air-dicekal (in Indonesian).
31. See http://www.detiknews.com/read/2008/08/12/222342/987501/10/ditetapkan-jadi-tersangka-komisaris-adam-air-dicekal (in Indonesian).