Adam Air

History

Adam Air was founded in 2002 by Agung Laksono, an Indonesian businessman and the Speaker of Indonesia's House of Representatives, and Sandra Ang. Sandra Ang is from an Indonesian-Chinese family which owned the airline. The airline was named after Sandra Ang's 26-year-old son Adam Suherman, who was then named Chief Executive Officer (CEO) of the airline. After studying in the United States, Suherman suggested that his family form an airline.

The airline was established in 2002 and began operations on 19 December 2003 with 2 Boeing 737 aircraft leased from GE Commercial Aviation Services.

Adam Air had 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, foreign investment interest evaporated with the crash of Flight 574.

Indonesian investment firm PT Bhakti Investama Tbk was interested in acquiring Adam Air. The company already owned a stake in PT Indonesia Air Transport Tbk, a subsidiary of Pt Media Nusantara Citra Tbk, the southeast Asia's largest and most integrated media group, 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.

Aviation consultant Gerry Soejatman stated that Adam Air was successful because of its "fresh image", referring to the bright colors of the airline's livery and uniforms. On August 22, 2006, Soejatman posted on Airliners.net, accusing the airline of poorly maintaining its aircraft, saying that any Adam Air aircraft is at risk of becoming "a smoking hole in the ground."

Following the crash of Adam Air Flight 292 in Batam, PT Bhakti Investama and business consortium Bright Star Perkasa, which together own 50 percent share in Adam Air, planned to bail their investments and sell their shares back to the carrier's founders. Bhakti Investama's investor relations official Henry Suparman did not cite any specific safety incident in the airline but said that Bhakti had not seen any significant progress in the airline's handling of safety issues in the past year.

Their fleet consisted entirely of Boeing 737's with 4 Boeing 737-200's, 3 737-300's (one written off), and 7 737-400's (one written off). One 735, 5 734s, 3 733s, and 2 732s were sold prior to the airline's grounding/shutdown.

Incidents and accidents

In 2006, one plane skidded off a runway, and two others were operated despite known malfunctions related to landing gear.

Flight 782

On February 11, 2006, Flight 782, registration number PK-KKE (c/n 23773), lost navigational and communications systems twenty minutes into a flight from Jakarta to Makassar, Sulawesi. The plane was subsequently flown into a radar "black spot" and was lost for several hours, eventually making an emergency landing at Tambolaka Airport, Sumba (on a different island 481 km away from their intended destination, and southeast from their origin, instead of northeast). The pilot in that incident was fired. Adam Air broke multiple safety regulations, including removing an aircraft before it was due for inspection by aviation authorities.

Flight 574

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 (c/n 24070), 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 were located, but were not initially recovered due to a dispute between Adam Air and the Indonesian Government over who should pay recovery costs. Both recorders were retrieved after Adam Air agreed to pay for 7 days worth of searching. A 2009 episode of Mayday (Air Crash Investigation, Air Emergency) about Flight 574 stated that the official crash report had concluded the Inertial Reference System (IRS) had failed. This failure, which should not by itself have brought the plane down, caused the pilots to become preoccupied with trying to fix it. After changing the IRS from "Navigate" mode to "Attitude" mode, the pilots failed to manually fly the plane while the computer system recalibrated, a procedure that takes about 30 seconds. The failure to maintain straight and level flight during the recalibration caused the autopilot to completely disengage and cease compensating for the plane's tendency to roll to the right, which caused the nose of the plane to dip. In attempting to correct the pitch of the aircraft before levelling the wings, the pilot sent the aircraft into an unrecoverable downward spiral, leading to the plane suffering massive structural failure as it descended at near the speed of sound. The investigation disclosed that the accident aircraft, including the faulty IRS and several other systems, had been the subject of more than 40 pilot complaints, or "write ups" in the months prior to the crash.

Flight 172

On February 21, 2007 Flight 172, an Adam Air Boeing 737-300 aircraft flying from Jakarta to Surabaya with registration PK-KKV (c/n 27284), had a hard landing at Juanda International Airport. The incident caused the fuselage of the plane to crack and bend at the middle, with the tail of the plane drooping towards the ground. There were no reports of serious injuries from the incident. Subsequent flights to the airport were diverted to alternate airports. As a result, six Adam Air 737s were grounded awaiting safety checks, but five of these were then put back in regular service. Adam Air described this as "harsh punishment" for an accident it blamed on poor weather conditions, but Vice President Jusuf Kalla has said that all Boeing 737-300s should be checked.

Flight 292

On March 10, 2008, an Adam Air Boeing 737-400 aircraft flying from Jakarta to Batam with registration PK-KKT (c/n 24353), skidded 75 metres off the end of the runway while landing in Batam. All passengers survived, with two passengers treated for shock. The plane sustained damage to one wing. This accident contributed to the airline's demise, just eight days later, and the formal revocation of its AOC two months later. The incident also illustrated that crew were not trained correctly on evacuation procedures. In particular during the evacuation of this aircraft no slides were deployed to get the passengers off the aircraft.

Safety

The safety record of Adam Air has been heavily criticized. Adam Air has reportedly bribed pilots to fly planes they knew were unsafe. Pilots have reported repeated and deliberate breaches of international safety regulations, and aircraft being flown in non-airworthy states for months at a time. They claim that there have been such incidents as requests to sign documents to allow an aircraft to fly, while not having the authority to, and while knowing the plane to be unairworthy, flying a plane for several months with a damaged door handle, swapping parts between aircraft to avoid mandatory replacement deadlines, being ordered to fly aircraft after exceeding the take-off limit of five times per pilot per day, flying an aircraft with a damaged window, using spare parts from other aircraft to keep planes in the air and ignoring pilot's requests not to take off due to unsafe aircraft. The Associated Press quotes one pilot as saying that "Every time you flew, you had to fight with the ground staff and the management about all the regulations you had to violate". They also claim that if pilots confronted their seniors in the airline, they were grounded or docked pay.

Founder Adam Adhitya Suherman personally denies the accusations, stating that maintenance costs "up 40 percent of our total operational costs".

Corruption

The Asia Times says it has spoken to "some well-placed local sources requesting anonymity", who claim that Agung Laksono didn't invest any of his own money into the airline, instead using money available to him through his official government position. This gave him the unfair advantage of receiving heavily regulated licenses and airport landing rights. The same people say that the Ang family had no previous experience in the aviation industry. Adam Air's original advertising campaign contained statements considered by many to be direct lies, telling passengers to take to the skies with its "new Boeing 737-400s", despite the fact that its two Boeings, leased from GE Capital Aviation Services, were used and over 15 years old. At the time Adam Air was founded, the 737 aircraft families making up Adam Air's fleet had been out-of-production for several years, replaced by the 737 Next-Generation series.

After an 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 was then required to conduct a total of 13 test flights with DGAC inspectors aboard before the aircraft could be returned to commercial service. 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, said the incident was "a serious violation", and promised a full investigation. However, no sign of the investigation's findings exists on the public record, and it is unclear whether the investigation took place at all. Critics say Adam Air used its political connections to sidestep aviation authorities.

When asked by Tempo magazine what caused 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.

Other legal issues

Large numbers of pilots joined the airline when it was founded in 2002, but at least 20 quit within months over safety concerns.

On 17 May 2005 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. A Liputan 6 article stated that Adam Air is not attempting to claim for damage caused by the pilots' public accusations of poor safety standards.

On 10 January 2007 there was a report that Indonesian consumer and labour groups were planning to lodge a US$100 million suit, claiming the airline neglected safety in order to save money.

On 21 February 2007 it was reported 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 a duty of 30,000 Rupiah each, when in reality they owed none. The money was then split between fourteen staff members. A computer from the check-in desk, as well as passenger tickets and lists, were seized.

Warnings and subsequent shutdown

On March 16, 2007, the Indonesian government announced plans to shut down an unspecified Indonesian air carrier. Although no details were immediately released, it was revealed that the airline had had a string of recent accidents, making Adam Air the most likely candidate. One official from the airline, speaking anonymously as he was not permitted to speak to the press, said that Adam Air was "prepared for the worst." It was announced on March 22 that Adam Air was one of seven airlines that would have their licenses revoked within three months unless they could improve their safety standards. The other six airlines involved were Batavia Air, Transwisata Prima Aviation, Tri-MG Intra Asia Airlines, Manunggal Air Services, Jatayu Airlines and Kartika Airlines. All fifty-four of Indonesia's airlines were told to make some improvements.

It was reported on June 28, 2007 that Adam Air would escape shutdown and had upgraded its safety rating to the middle tier. The airlines that lost their licenses were Jatayu Gelang Sejahtera, Aviasi Upataraksa, Alfa Trans Dirgantara and Prodexim and airlines that were grounded pending improvements and facing potential licence revocation were Germania Trisila Air, Atlas Delta Setia, Survey Udara Penas, Kura-kura Aviation and SMAC.

As reported on the local news, Adam Air reduced many of its flights. Adam Air decreased its frequencies to only several flights departing both from Jakarta Airport and Surabaya Airport.

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.

On 18 March 2008, after the accident at Batam, in which a Boeing 737 skidded off the runway while landing, 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 revoked Adam Air's AOC, banning it from flying permanently.

However, the company had been in financial trouble even before the government's decision to shut it down, mostly due to mismanagement. The company's owner (Sandra Ang) had been allegedly embezzling the company's money. The financial losses from the embezzlement reportedly amounted to Rp 2.1 trillion (approximately US$210 million). On August 12, 2008, the Indonesian police named Sandra Ang as a suspect for money embezzlement. She was also banned from leaving the country.

Fleet

Adam air fleet as of Dec 1st 2007.

5x Boeing 737-200 6x Boeing 737-300 13x Boeing 737-400 1x Boeing 737-500

Much of the fleet subsequently left the airline over the first 3/4 of 2008 as Adam air down sized. By the end of April 2008 only one 737-200 remained.

Indonesia

Malaysia

Singapore