Indonesia AirAsia (QZ, Jakarta Soekarno-Hatta) is to be consolidated into longhaul sister firm Indonesia AirAsia X (XT, Denpasar) the Director General of Civil Aviation Ministry of Transportation (MOT) Suprasetyo has announced.

Speaking to the Jakarta Times, Suprasetyo said last week that the merger would allow Indonesia AirAsia to meet new recapitalization requirements following the expiration of a September 30 deadline. The move will also allow IAAX to comply with local laws governing fleet minima.

"By merging with Indonesia AirAsia X (IAAX), Indonesia AirAsia's equity is no longer negative, and IAAX doesn't have negative equity since it hasn't yet being audited and has been operating for less than a year," he said.

PT Indonesia AirAsia is a 49/51 joint-venture between the AirAsia (AK, Kuala Lumpur Int'l) Group and Indonesian firm PT Fersindo Nusaperkasa while PT Indonesia AirAsia X is a 49/51 joint venture between AirAsia X (D7, Kuala Lumpur Int'l) Berhad and PT Kirana Anugerah Perkasa (PTKAP). The shareholders of PTKAP are also the Indonesian shareholders in Indonesia AirAsia.

In a bid to improve aviation safety, Jakarta this year promulgated a new law - No. 45/2015 - which defines the minimum prescribed capital airlines operating with various capacities must have.

Under the legislation, scheduled airlines operating planes with a capacity of 70 seats or more are required to have a paid-up capital of at least IDR500 billion (USD37.5 million) while those with aircraft with 30 seats or less must have a paid-up capital of at least IDR300 billion (USD22.5 million). Cargo operators are required to be capitalized to at least IDR100 billion (USD7.5 million).

In July, the MOT gave thirteen local carriers - Indonesia AirAsia, Batik Air (a subsidiary of Lion Air), Cardigair, Transwisata Air, EastIndo, Survai Udara Penas, Air Pacific (Indonesia), Jhonlin Air Transport, Asialink Cargo Express, Ersa Eastern Aviation, Tri-M.G. Intra Asia Airlines, Nusantara Buena Air, and Manunggal Air - an ultimatum to exit negative equity (debts are greater than the value of assets) or risk losing their operator's licences.