Last summer Asian
currencies went into freefall,
with the Malaysian ringgit and
the Thai baht each falling about
50% and the Indonesian rupiah
declining about 70%. Even the
Australian dollar fell to an 11-
year low, losing about 20% of its
value against the U.S. dollar.
Naturally, my immediate response
was to plan a dive trip to
take advantage of these bargain
exchange rates. Then I thought
about it more carefully.
Others must have reconsidered
as well: in Indonesia,
tourist arrivals for the first two
months of this year fell 12.1%
from last year. According to
Reuters, East Asia and the
Pacific region suffered their
worst-ever tourist season. Even
Australia is predicting no growth
in tourism in 1998.
So why is what sounded like
a travel bargain turning out to
be a travel bust? Before the
current crisis, Asian economies
were growing rapidly and
gearing up for a great tourist
influx. New tourist-related
construction broke ground, new
airlines were launched, and
established airlines embarked
on costly modernization programs.
After the floatation of the
Thai baht last July, however, the
castles in the air fell with a great
thud, and the values of Pacific
currencies toppled. Experts
predict that economic recovery
will take two to five years, with
countries that were especially
hard-hit, such as Indonesia and
Thailand, possibly taking even
longer.
Where does all this leave the
travel industry? Somewhere
between the proverbial rock and
hard place, by most accounts. When travel is down, half the
fares you collect are in sharplydeflated
local currencies, and
your highest expenses, such as
debt, fuel costs, and lease payments,
are fixed in dollars, it just
doesn't leave a whole lot of room
to maneuver.
Although some carriers, such
as Australia's Qantas, are on fairly
stable financial footing after
canceling only a handful of
routes, many Asian airlines are in
serious trouble and could cancel
flights without notice. Malaysia's
regional carrier, Saeaga Airlines,
suspended operations in March.
Indonesia's Garuda International
has reduced the frequencies of
many flights and suspended its
only U.S. flight. All Indonesia's
airlines are cutting routes, taking
planes out of service, even
returning leased planes. Malaysia
Air, Thai Air, and Australia's
Ansett are also trying to improve
their cash positions. Primary
carriers will probably survive,
but analysts predict that secondand
third-tier carriers, such as
Malaysia's Pelangi Air and
Indonesia's Sempati, will probably
disappear. Sempati, for
example, left a plane with
mechanical problems on the
tarmac in Bali for weeks, stranding
hundreds of passengers.
Food and taxi services are
certainly much cheaper. Many
hotels tried to protect themselves
by charging in dollars but
provoked so much local ire that
some of them are now rethinking
their position.
With live-aboards, however,
dollar pricing has long been the
norm, because they are aimed
squarely at the U.S. diving
market. Many of their expenses
are also in dollars. A spokesman
for Siam Dive n' Sail explained
that boat parts, engines, labor,
equipment, compressors,
advertising, and internet
charges are all tied to the dollar.
And U.S. advertising and agents'
commissions tack a heavy markup
onto the bottom line.
When it comes to diving,
even little things seem tethered
to the dollar. The price of a tank
filling, for example, is partially
determined by the cost of the
imported air filter and spare
parts. Wakatobi Divers says
"guests pay for top dive equipment,
top-of-the-crop expatriate
dive instructors, satellite-based
communication -- all imported,
all paid in dollars." And as long
as profits are tabulated in dollars,
the cost of trips and services will
be, too.
In addition, some travelers
understandably have cold feet
about Asia's political and social
instability. Even a few weeks ago,
before the situation in Indonesia
had become so volatile, the
Fantasea had decided to postpone
its Indonesian cruises for one
year, saying that the "relentless
negative press coverage makes
Indonesia a difficult destination
to sell and bookings were disappointing
to say the least." Similarly,
the Asian Diving Equipment
and Marketing Show, which was
to be held in Jakarta this year, has
also been canceled. Now, with
death tolls from Indonesian riots
reaching into the hundreds, the
State Department has recommended
that American citizens
evacuate the country.
When the political situation
stabilize, however, there are still
Indonesian destinations that
should be serviced by major
carriers. Resorts like Kungkungan
Bay on Sulawesi, which we
reviewed favorably, should not be
significantly affected since both
Silk Air and Singapore Air have
international service into
Manado. Wakatobi, in the far south, which I liked a lot, may
also fare well since the Ujang
Pandang to Kendari flight is a
relatively major one and they also
have a ferry for backup. (Last
year there were two flights a day;
now it's down to one.)
Major international carriers
fly into Indonesia, so live-aboards
leaving from major points of
embarkation should not be
significantly affected. The same is
true for Thailand, where liveaboards
depart from primary
destinations like Phuket. And
Australia, of course, is no problem.
Despite inconveniences,
bargain-basement exchange rates
and low airfares are still tempting.
Island Dreams reports
ticketing a passenger from Los
Angeles to Bangkok for $800, and
Qantas offered roundtrip fares between Los Angeles and Sydney
for as little as $718.
So if you're hell-bent on
traveling to Asia, you'll have to be
flexible and attentive, monitoring
flights continuously to get where
you want to go. If you do, some
grand bargains await you.
-- John Q. Trigger