Indonesian Flag Carrier Garuda to Expand International Routes

Jakarta, Indonesia | January 07, 2009 by D-8 Secretariat

Garuda is expanding international routes and business

As most international airlines head into the red, slashing routes and spending, flag carrier Garuda Indonesia has revealed plans to fly new routes and expand its business. On Wednesday, the airline announced it would open 16 new flight routes this year — 13 domestic and three international — as well as add more aircraft to its fleet.

The new routes will begin gradual operation from Jan. 16, and will later be supported by 14 new Boeing 737-NG aircraft to be delivered in mid-2009.

The new international routes will link Denpasar with Adelaide, Denpasar with Hong Kong, and Surabaya with Hong Kong.

Garuda says the new international routes are aimed at establishing a stronger flight network rather than generating significant profit.

“We need to establish a strong network, especially in the (Asia-Pacific) region, so we can create a new market for the new airplanes,” Garuda spokesman Pujobroto told an Indonesian media, The Jakarta Post on Friday.

“Our new routes will give international travelers more options when visiting Indonesia.”

Garuda currently operates 54 aircraft, including six new Boeing 737-NGs that were delivered last year.

By 2013, Garuda will have 128 aircraft, including 50 Boeing 737-NGs and 10 Boeing 737-300ERs that are currently being built.

“Backed by 128 aircraft, in 2013 Garuda Indonesia will make a quantum leap into the future,” Garuda president director Emirsyah Satar said in a statement.

Garuda mainly serves domestic routes, making it relatively immune to the global shakeup. Its international routes include flights to Japan, Australia and the Middle East.

The airline used to operate flights to six European cities before the European Commission imposed a flight ban in mid-2007 on all Indonesian airlines, due to safety concerns following a spate of fatal accidents involving Indonesian airlines.

The Transportation Ministry, however, is upbeat the commission will lift the ban in March.

“If the EC lifts the ban, our top priority is to open a flight route to Amsterdam ,” Pujobroto said.

Garuda is eyeing Rp 15 trillion (US$1.33 billion) in revenue and around $300 million in operating profits in 2008. The company currently has outstanding debts of around $700 million.

Emirsyah previously predicted revenue for local airlines to grow by 10 percent next year, down from the usual 15 percent.

Garuda reported it had achieved 85 to 95 percent seat load factor during the Christmas holiday. Its load factor for returning travelers reached 95 percent through to Jan. 5.

The Transportation Ministry predicted domestic air passenger numbers of 46.34 million last year, an 18.3 percent jump from the 39.2 million passengers in 2007. It also forecast 3.37 million international passengers in 2008, up 5.64 percent from 3.19 million in 2007.

Maintenance Center Meets International Standard

Meanwhile, the maintenance center of the Garuda Indonesia Group, PT GMF AeroAsia, is considered to have met the international aviation security system standard.

The US Transportation Security Administration confirmed this when monitoring the facility in December last month.

GMF spokesperson, Dwi Prasmono Adji, said that GMF has been trying to meet the standards and procedures for maintaining aircraft as already determined by the US Federal Aviation Administration (FAA).

The FAA audited GMF on August 19-21.

“The TSA statement will help GMF in gaining trust from US customers,” Dwi told Tempo yesterday (29/12).

An American airline, Southern Airlines, has entrusted GMF with its maintenance.

D-8 Civil Aviation Working Group so far has organized a number of Working Group meetings since 2007. D-8 Secretary General, Dipo Alam, cherished this news and said that he will bring up this encouraging news and discuss it in the scheduled working groups in near future. He added that the organization is very much pleased by positive efforts from all aviation communities in D-8 countries to support and improve service, production, and business opportunities among memberstates.

Alam also encourages the civil aviation authorities of the memberstates to develop detailed program and plan to boost the involvement of private sectors in the airlines, and airport construction business. He brought to mind the model of cooperation betewen Malaysia’s AirAsia, that worked with the Islamic Development Bank, Gulf-linked Crescent Venture Partners and Deucalion Capital, a Frankfurt-based global private equity fund to help finance the purchase and lease of 11 Boeing 737-300 aircraft.

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