The flag carrier of Timor Leste Air Timor has terminated its flight connecting Dili and Denpasar (Indonesia) as of 10th of January 2017 due to Timorese government policy for granting Sriwijaya Air‘s subsidiary NAM Air to dump capacity in the route.

The airline said that the daily flight to Denpasar was operated with the Indonesian LCC Citilink was closed due to the significant over capacity on the route. 

In a company statement, Air Timor claimed that the Timorese government decision in late 2015 to grant NAM Air rights to fly from Denpasar to Dili meant the route was in total overcapacity. There were so many seats available compared to market demand that the three airlines could only achieve 50% or less Load Factor.

The CEO of Indonesian LCC Citilink Albert Burhan has resigned from his position on the 30th of December 2016, just 2 days after the incident involving the airline’s pilot who was allegedly drunk prior to takeoff. Citilink Chief Operating Officer Hadinoto Soedigno has also resigned following the CEO’s decision.

Air Timor said that airlines usually need 70% to breakeven. Air fares of the Dili – Denpasar route had dropped to $70 – far below normal market prices. Air Timor claimed that it losses exceed $3 million as of December 2016.

Air Timor CEO Abessy Bento said that the Vice Minister of Transport Inacio Moreira has permitted NAM and Sriwijaya to operate aircraft up to 22 years old, although regulation states 20 year maximum.  

Bento added that the company had expended millions of dollars to create Air Timor as a local Timorese airline and it had trained up local staff overseas and had attempted to build an airline Timor could be proud off. He said the IT systems worth over a million dollars, were second to none capable of connecting to Singapore Airlines and Garuda.