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It's been four days since budget carrier Adam Air's Flight 574 disappeared over the Indonesian archipelago, and despite a search and rescue effort involving ships, planes and ground patrols, authorities are no closer to finding the wreckage or any possible survivors. The Boeing 737-400, which took off from Indonesia's main island of Java en route to the popular diving destination of Manado with 102 people on board, emitted a signal from its emergency beacon over the mountainous island of Sulawesi before dropping out of sight on New Year's Day.

Flight 574's disappearance and the so far fruitless search have raised questions about the safety of Indonesia's booming airline industry. Since the aviation industry was deregulated in 1999, allowing private firms into a sector previously open only to government companies, 19 new carriers have taken to the skies. Critics say the country lacks adequate technology and systems infrastructure to keep track of all the new planes. "I predicted something like this would happen two years ago," says Dudi Soedibyo, senior editor at aviation magazine Angkasa. "The industry has grown too fast and we still do not have the systems or manpower to deal with this many airlines." Authorities in Makassar, South Sulawesi—the airport closest to the presumed crash site—were unable to pinpoint where the airplane went down. Early reports that the wreckage and a dozen survivors had been found in the remote mountains of Sulawesi—reports picked up by aviation officials and the airline itself—later proved to be based on nothing but local rumor. The last coordinates of the plane, at 30,000 feet, were in fact provided by Singaporean authorities, raising questions over Indonesia's ability to effectively monitor its own air space. "Our infrastructure needs to be improved and ideally there should only by about five to eight carriers in the country," says Soedibyo. "This latest accident is just the tip of the iceberg."

Every year, more than 30 million passengers fly with small Indonesian carriers like Adam Air, which launched in 2003. Many have spotty safety records. A Boeing MD-82 operated by Lion Air crashed in Solo in 2004, killing 25 of the 141 people on board, and a Mandala Airlines Boeing 737 crashed in Medan, Indonesia's third-largest city, in September 2005, killing all 102 on board and 47 residents on the ground. In 2006 there were at least 15 aircraft accidents in Indonesia, resulting in 14 fatalities. One foreign resident tells of an Adam Air flight last year from Jakarta to Lombok which left with his luggage but not him. "That's how terrorists blow up planes," he notes, asking not to be identified. "But [the airline] didn't even seem to care." Gugi Saputra, commercial director for Adam Air, says the airline would have tried to contact the passenger and that a porter may have removed the wrong bags by mistake. "We would never take off without a passenger who has checked in his bags," he says. On the subject of the Sulawesi crash, Saputra maintains that the jury is still out: "We always put safety first and we cannot blame safety problems for the crash as the cause is still unknown."

Industry observers warn that Indonesia's regulators need to make sure budget carriers are keeping fares low by streamlining operations and cutting back on amenities like meals and service, and not reducing tariffs at the expense of safety. "Compliance must not just be in terms of their fleets but also in terms of human resources, runways and landing systems," says Bambang Susantono, chairman of the Indonesian Transportation Society. "We need to ask why the radar in Makassar's airport was not able to pick up any distress signals and where the problem is."

Aviation isn't the only area of Indonesia's transportation sector, vital to the 220 million people spread across its 1,800 islands, to be in difficulty. As Jakarta called in Singapore and the United States for help in the search for the aircraft on Thursday, local officials in East Java continued rescue efforts for the victims of a shipping disaster that left more than 400 missing when a ferry with 628 passengers went down off the coast of Java last Friday. On Wednesday, Indonesian President Susilo Bambang Yudhoyono announced the creation of a special team to evaluate the nation's transport sector. "There are new paradigms, including the emergence of low-cost carriers and the worsening weather conditions in the past 10 years," Air Transport Director-General Ikhsan Tatang told reporters after meeting with the President on Thursday. "This prompts an evaluation of our transport rules and management."

Adam Air officials have placed full-page ads in local newspapers apologizing for the disappearance of their plane and pledging to find the 17-year-old aircraft. The government has also pledged to continue searching for the wreckage, which is believed to be in the mountains somewhere in west Sulawesi in eastern Indonesia. "Apart from the weather, the terrain is extremely difficult and complicating search efforts," Transportation Minister Hatta Radjasa told the press on Wednesday. "But we will keep looking until it is found."

• Jason Tedjasukmana / Jakarta