$100 Bali fares likely in air war

Three Indonesian airlines banned from flying to Europe because of safety concerns are expected to be granted rights to fly the popular Perth-Bali route, sparking another price war.

Travel agents predict one-way fares could dip below $100 after news that a fourth Indonesian airline, Batavia Air, which has just had a European Union ban lifted, will start a daily service to Denpasar on August 26.

Sriwijaya Air, Mandala Airlines and Lion Air have also applied in Indonesia for access to the route.

The number of travellers to Bali has more than doubled in five years from 214,000 in 2005 to 463,352 last year. Early figures point to another 50 per cent increase on 2009 this year.

Pacific Blue, Jetstar, Indonesia AirAsia, Strategic Airlines and Garuda Indonesia already operate 52 flights a week on the Perth-Bali route.

Batavia Air director Hasudungan Pandiangan said the airline would target young adults and families.

"Bali is always a popular destination for Western Australians and we are proud to finally service Perth in our network," he said.

Batavia Air will use a 144-seat Airbus A319 on the route.

Several travel agents expressed dismay, suggesting that some Indonesian airlines would not be able to sustain services because of the expected fare war.

"It is crazy to allow all these new airlines, none will be able to achieve economies of scale," one agent said.

Over the past 20 years, Sempati Air, Merpati Airlines and Air Paradise have collapsed or withdrawn from the route while Jetstar replaced Qantas and OzJet went into liquation last year.

Indonesia AirAsia's fares typically start from $298 return but are often on special for about $180 return with labour costs for the Indonesian based airlines up to 80 per cent lower than for Australian carriers in some areas.