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Garuda Indonesia

Case Study: Garuda Indonesia to Focus on International Expansion


MM5003 Marketing Management

Syndicate 6

Melisa

29114346

Muhammad Nur Ikhsan

29114400

Ilmi Khaera Azizah

29114440

Muhammad Bintang

29114450

MBA-ITB
School of Business and Management
Bandung
2015

CHAPTER I
INTRODUCTION

1.1. Garuda Indonesia Profile


Garuda Indonesia is the flag carrier of Indonesia and serves as a full service
airline. Garuda Indonesia currently operates 82 aircrafts and serves 33 domestic
and 18 international destinations in Asia (Regional Southeast Asia, Middle East,
China, Japan and South Korea), Australia, and Europe (The Netherlands).
Garuda Indonesia has three services hub in Indonesia. First, business hub,
based in Soekarno-Hatta International Airport, Jakarta. Second, leisure hub, based
in Ngurah Rai International Airport in Denpasar, Bali. In order to improve flight
capacity and frequency to eastern part of Indonesia, Garuda Indonesia launched a
third hub at Sultan Hasanuddin International Airport in Makassar, South
Sulawesi.
Apart from the main business as full service airline, Garuda Indonesia
Group also consists of Strategic Business Unit (SBU) and Subsidiaries. The
SBUs are Garuda Cargo and Garuda Medical Center. The subsidiaries are PT
Citilink Indonesia as Low Cost Carrier (LCC); PT Aerowisata (hotel, ground
transportation, travel agent and catering); PT Abacus Distribution Systems
Indonesia (global distribution system); PT Aero System Indonesia/Asyst
(provider of IT services for the travel and transportation industry), and PT Garuda
Maintenance Facility or known as GMF AeroAsia (aircraft maintenance, repair,
and overhaul).In February 2011, Garuda Indonesia has taken historic step to
become a public company and listed in Indonesia Stock Exchange.
(https://www.garuda-indonesia.com/jp/en/investor-relations/about-garudaindonesia/corporate-profile/history/index.page?)

1.2. Garuda Indonesia History


The name "Garuda" was given President Soekarno, which he quoted from a
Dutch poem composed by a popular poets that time, Noto Soeroto; "Ik ben
Garuda, Vishnoe's vogel, die zijn vleugels uitslaat hoog bovine uw einladen",
meaning "I am Garuda, Vishnoe's bird which spread its wing high above your
archipelago".

The first commercial flight from Calcutta to Rangoon was made on January
26, 1949, using a Douglas DC-3 Dakota aircraft with the tail number of RI 001
and the name Indonesian Airways. In the same year, on December 28, 1949,
another DC-3 aircraft registered as PK-DPD with the logo Garuda Indonesian
Airways on its fuselage flew from Jakarta to Yogyakarta to pick up President
Soekarno. This was the first flight made under the brand of Garuda Indonesian
Airways.A year later, in 1950, Garuda Indonesia was officially established as a
State Corporation. During that period, the company operated a fleet of 38 aircraft
comprising 22 DC-3 aircraft, 8 Catalina flying boats, and 8 Convair 240 aircraft.
The fleet continued to grow, and Garuda Indonesia made its first flight to
Mecca carrying Indonesian hajj pilgrims in 1956. Flight routes by Garuda
Indonesia to European countries started in 1965 with Amsterdam as the final
destination. Throughout the 80s, Garuda Indonesia underwent large-scale
restructuring for its fleet and operations. It was at these times that the company
begun to develop comprehensive training programs for its air and ground crews
and established a dedicated training facility in West Jakarta, named the Garuda
Indonesia Training Center. The Company also built an Aircraft Maintenance
Center at Soekarno-Hatta International Airport.
In the early 90s, Garuda Indonesia developed a long-term growth strategy
which was applied until the year 2000. The company continued to expand its fleet
and Garuda Indonesia also ranked among the 30 largest airlines of the world.
Alongside initiatives in business development, a new management team
took office early in 2005, and new plans were formulated for the future Garuda
Indonesia.

The

new

management

of

Garuda

Indonesia

undertook

comprehensive re-evaluation and across-the-board restructuring of the company.


The objective was improving operational efficiency, regaining financial stability
that involved efforts in debt restructuring including leasing liabilities from the
European Export Credit Agency (ECA), increasing awareness among employees
concerning the importance of service to customers and, most importantly,
reviving and revitalizing the Garuda Indonesia spirit.The successful completion
of the Companys debt restructuring program opened the way for Garuda
Indonesia to go public in early 2011.
(https://www.garuda-indonesia.com/jp/en/investor-relations/about-garudaindonesia/corporate-profile/history/index.page?)

CHAPTER II
ISSUES & RECOMMENDATION
2.1. Issues
Garuda Indonesia is preparing for expansion with enhancing service, which is
increasing frequencies and destination in anticipation of joining the SkyTeam and
ASEAN Skies. They plans to increase they fleet between 2015 2025. By now,
Garuda has 110 aircraft with various type of aircraft. They have secured $200
million from banks to fund expansion and they aim to raise $163 million. In 2014
they plans to allocate $325 million in capital expenditure for business expansion.
In October, they obtained $1.7 billion loan from ICBC to leasing back six Airbus
320s which will be operated by Citilink and

five Boeing 777-300ERs for

mainline fleet. Garuda plans to expand their flight to North Asia and delayed five

time-a-week flight to London due to PCN of the runway at the Jakarta still not
meet the requirement of PCN for operating a full-capacity 777-300ER, while
service to Amsterdam is planned for 2015. For the regional services, Garuda is
enhancing itself by the delivery 2 of 25 ATR72-600s. But now Garuda has to face
the challenges with a plugging rupiahs rate to US dollar which is exceed
Rp12.000 in January. However, now Garuda is transitioned well from banned
airline into a best Indonesian Carrier. Problem for Garuda Indonesia to expand
their service is the infrastructure for the airport is not in the pace of market
growing.
But immediately Garuda is announce a cancellation for opening of new two
international routes, which is to Manila or Mumbai. The company suffered from
increasing losses during the first half of the year. Rupiah depreciating and the fuel
price was increasing. Garuda had to cope with increasing operational cost, which
is 40% used to pay fuel. And Garudas revenue, 0.7%, is inferior than its expense
which climbed 15%. So with that current condition, Garuda is delaying expansion
plans. Even Garuda has to close the Taipei route for efficiency.

2.2. Analysis
2.2.1. Marketing Plan of Garuda Indonesia
The market segmentation, targeting, and positioning (STP) process is a
fundamental concept understanding marketing and the strategies of firms.
Segmentation & Targeting
Garuda Indonesia serves Indonesias fast-expanding middle-upper class,
medium to high value customer. Many wealthy Indonesians insist on flying first
class. Garuda Indonesia decides to target customer in business and leisure
segment, grabbing the middle upper section of the market.

Positioning
Garuda Indonesia positioned itself as full service airplane offering premium
quality of service, indulging passengers five senses.

2.2.2. Marketing Mix of Garuda Indonesia


The marketing mix refers to the set of actions, or tactics, that a company uses
to promote its brand or product in the market. The 7Ps make up a typical
marketing mix - Price, Product, Promotion, Place, People, Process and Physical
Evidence.
Price
The average ticket price of Garuda Indonesia is higher than other airlines
in Indonesia. For instance, the ticket price shown as below.

(http://www.traveloka.com/fullsearch?ap=BDO.DPS&dt=09-032015.NA&ps=1.0.0)
Place
To deliver the services, Garuda Indonesia were developed 2 main
channels distribution, direct channel and indirect channel. Direct channel
consisted of Call Center, Sales Office & Ticketing Office, Website, Garuda
Online Sales (GOS), Bilateral Interline Traffic Management (BITA), and
Multilateral Interline Business Travel Agreement (MIBA), and Mobile

Ticketing Counter (MTC). For Indirect Channel consisted of Travel Agent,


GSA (General Sales Agent), and IBCS (IATA BSP Consolidator System).
For Operation, Garuda Indonesia has three services hub in Indonesia.
First, business hub, based in Soekarno-Hatta International Airport, Jakarta.
Second, leisure hub, based in Ngurah Rai International Airport in Denpasar,
Bali. In order to improve flight capacity and frequency to eastern part of
Indonesia, Garuda Indonesia launched a third hub at Sultan Hasanuddin
International Airport in Makassar, South Sulawesi.

Product
Service is a core business of Garuda Indonesia. Garuda Indonesia has
launched a service concept called "Garuda Indonesia Experience". This
service offers a concept reflects the genuine hospitality of Indonesian and
presents the best aspects of Indonesia to the passengers. They offers
passengers a distinctive service concept ingrained with Indonesian hospitality
and all the best that the country has to offer. This is prove by The Gold
Awards from The Pacific Asia Travel Association (PATA).
Garuda Indonesia Experience refers to "5 senses" (sight, sound, scent,
taste, and touch) and includes a 28 "customer touch points" services ranging
from pre-journey, pre- flight, in-flight, post-flight and post-Journey. This
section can provide cost advantages to improve switching so that consumers
think twice or difficult to switch to another service product.
The 5 senses will explain as follows. First, Sight concept offers the
beauty of Indonesia that can be found at new aircrafts interior design which
combined natural colors and Indonesian exquisite traditional motives. This
concept is also reflected on the attractive colors of cabin crews uniform.
Second, Sound. Music and traditional instruments is mirror of diversity of
ethnic groups and cultures in Indonesia. Passengers can enjoy it through
sophisticated entertainment device in the First Class, Business Class and
Economy flight. Cutting edge Audio and Video On Demand (AVOD) device
offers a variety of options to enjoy the entertainment, including traditional

and contemporary music of Indonesia. Third sense is scent. Diverse flower


petals and aromatic herbs have been used since ancient times. This fragrance
is a blend of oils from plants and spices native to Indonesia such as clove and
nutmeg, to create refreshing and soothing fragrance that can be sensed in the
Garuda Lounge and sales offices. The fourth, Taste. Indonesian Culinary Arts
is influenced by various cultures and blended in the flavor of traditional
foods. This tantalizing flavor of Indonesia is infused in the food and drink
distinctive to Garuda Indonesia, such as assortment of satay, yellow rice and
martebe juice, a mixture of passion fruit and tamarillo. Last, Touch. The
Garuda Indonesia Experience is a new concept of service which presents best
aspects of Indonesia to passengers. Starting from flight reservation until
arrival at destination airport, passengers will be spoiled by courteous and
friendly service which characterize Indonesian hospitality and symbolized by
the Garuda Indonesia Greeting of cabin crew.

Promotion
Garuda Indonesia has a promotion program called GarudaMiles is a
promotion program based on membership service that is given as a token of
appreciation for loyal customers Garuda Indonesia. the accumulated miles
can then be redeemed for Award Tickets to desired destinations or Upgrade
Awards from Economy to Business Class on chosen flights. GarudaMiles
member also can enjoy special benefits such as: special check-in counters at
the airport, extra baggage allowance, priority baggage handling, priority
waitlist on ticket reservations, access to Garuda Indonesia airport lounges,
and great offers from partners of Garuda Indonesia worldwide. By September
2014, members of GarudaMiles currently reaches approximately 750,000
members. Besides flight activity of the members of this GarudaMiles
contribute to traffic by 30%, which continued to increase compared to
previous years. Other promotion program is credit card promotion such BNI
and CitiBank.
Garuda have to be creative to promote their brand. To increase brand
awareness of the international community against Garuda Indonesia. they has

cooperated with Liverpool Football Club. Garuda Indonesia sponsored


Liverpool FC by being official airline for Liverpool FC. As compensation,
Liverpool should use training kits with name Garuda Indonesis on it and
Garuda Indonesia got permission to put up a banner in front of the stadium.

People
Garuda has high quality human resources and well-trained employees. To
provide the customers with high quality of services as one of marketing stategy,
Garuda hired high quality peoples to give their best performance to run the
business process.
SDM sangat krusial. Kita bisa punya strategic plan yang bagus, investasi
barang-barang bagus,tapi pada akhirnya itu semua dijalankan oleh Manusia. Jadi
di Garuda kami menginginkan SDM yang tangguh (Emirsyah Satar - Ex
President Director of Garuda Indonesia)
Process
To facilitate customers to use the services of Garuda, they provide
convenience in the use of their services such as e-booking, self check-in and
immigration board service.
Physical Evidence
To strengthen their image as an Indonesian airline, Garuda provide
Indonesian ambience and Indonesian food in flight
2.2.3. Porters Five Forces
The industry analysis for Garuda Indonesia is done based on Porters 5 forces.
This analysisis done to show how Garuda is surviving or competing in the

industry compared to the other airlines. The 5 Porters forces that are examined
are:
1. Competitive rivalry within an industry
Garuda has a high level of competition within the industry. Garuda
experienced relentless price competition at home form nearly tow dozen domestic
airlines. However, Garuda still controlled 50 percent of the domestic market. The
numbers continued to drop after the worldwide travel industry suffered from
bombings in Bali, SARS epidemic and also wars that occurred in Iraq. Their
principal competitors are Lion Air, Singapore Airlines, Thai Airways, and
Malaysian Airline System. All of them are competing against each other to
provide the best airline services to the customers.
2. Threat of new entrants
Threat of new entrants of this industry is low because the barriers for new
entry in industry airline is high. The airline industry is an industry that requires a
large upfront amount of investment, therefore threat of new entrants can be
considered to be moderate. Besides large amount of investments, tight regulations
also make it hard for new entrants to enter the industry.
3. Threat of Substitutes
The threat of substitutes in the airline industry is very low. With no high-speed
train systems in Indonesia, the threat of substitutes has always been low.
Travelling with other means of transportation is significantly longer than by air
while the price difference to the consumer is not issue. The routes of other
transportation systems also put this substitute for air travel at a disadvantage.
4. Bargaining power of supplier
Bargaining power of supplier for Garuda Indonesia is low because Garuda
Indonesia group consists of Strategic Business Unit (SBU) and Subsidiaries. The
SBUs are Garuda Cargo and Garuda Medical Center. The subsidiaries are PT
Citilink Indonesia as Low Cost Carrier (LCC); PT Aerowisata (hotel, ground
transportation, travel agent and catering); PT Abacus Distribution Systems
Indonesia (global distribution system); PT Aero System Indonesia/Asyst
(provider of IT services for the travel and transportation industry), and PT Garuda
Maintenance Facility or known as GMF AeroAsia (aircraft maintenance, repair,
and overhaul).

Despite of fuel price makes Garuda Indonesia suffer for profit loss, Garuda
Indonesia can control another cost because its Strategic Business Unit (SBU) and
Subsidiaries.

5. Bargaining power of buyers


Bargaining power of buyers is significantly high in the airline industry. This is
because consumers are given the privilege of searching for the lowest flights
available on the internet and to complete the transaction without an intermediary.
Buyer power increases because of this reason.

2.2.4. Internal and External Factors


Internal Factors
The environmental scan of Garuda Indonesia Airlines is starting with the
internal factors of the company.
a. Image of the company
Garuda Indonesia Airlines have a very strong image as a premium full
service airline that serve an excellent service than other airline in Indonesia
even the ticket price is higher. They have a lot of loyal customers that have
been suited with their image, service and fares.
b. Routes
Since Garuda Indonesia Airlines is the national airlines of Indonesia,
they have some special advantages compare with other airlines. One of the
advantages that they have is special routes. Garuda cater most of the local
routes in Indonesia. Besides that, they also cater some of the international
routes, which giving another advantage in getting profit for the company.
c. Fares and Technology

Fares and technology of Garuda Indonesia could be described as


incompeteable. When other carriers are fighting with their zero fair and
taxes, Garuda is still fighting to increase their price. Recently most of the
carriers, include Garuda Indonesia, have been shifting their booking system
to the internet base.
External Factors
Some external factors that we can find in Garuda Indonesia Airlines are:
a. Competitors
Garuda has either local or international competitors that operate
the same route with them. Examples for local competitors are Batik
Air, Air Asia Indonesia, Lion Air Airlines. For international
competitors are Singapore Airlines, Malaysian Airlines, China
Airlines, Korea Airlines, Thai Airways, KLM.
b. Customers
Customers or target market of Garuda Indonesia are very wide
spread. For local market, Garuda target customer in business and
leisure segment, grabbing the middle upper section of the market.
Everyone is willing to pay and choose Garuda as their carriers for
premium service quality.
But in the international market, Garuda has really depended
with the high-layer government people, businessman and also
Indonesian workers/labors. They havent touched the students
market, even though this segment is a very potential market for them
since a lot of Indonesian student study abroad.
c. Market Trends
World market trends now are moving extremely. Because of the
economic crisis, now people are preferred to travel in short haul

more than long haul. Short haul mean people are travel in regional
around the country.

2.2.5. SWOT Firm


a. Strength

Good Pilot. The pilot of Garuda Indonesia is known as a good pilot


that wanted by many airlines. The adept knowledge of the Garuda Indonesia
pilots is as impressive as the technological wonders they fly. Garuda pilots are
one of the most experienced pilots in the world. This is an important strength
for the airline to get customer trust and loyalty.
Good services. Garuda offers one of the best airlines services and it can be
proven by the awards that it received in year 2001. Garuda received the ICSA award
(Indonesian Customer Satisfaction Award) in the category of Best on Time Airline
Award from Schiphol International Airport Amsterdam.
Good Management. Garuda Indonesia also received an award for having a
good management team. Travel Weekly East Magazine, Singapore, presented Garuda
Indonesia Innovators Award 2001 Airline (International): Crisis Management. An
award which is given to institutions, businesses and individual as an
acknowledgement of their extraordinary achievements.
Good Brand. This can be proven by two awards Garuda received which is
from Mark Plus &Co for Experimental & Emotional Branding Champion, and also in
2002 they received an award from MARS & Swasembada Magazine for the most
valuable brand in airline category.

b. Weakness
Finance (Profit Loss). With a weaker rupiah and an increase in fuel
prices, Garuda had to cope with increasing operational costs, of which 40
percent was used to pay for fuel, he said.The firms financial report released
last week showed that Garudas revenue rose 0.7 percent to $1.74 billion this
half, while its expenses, which include flight operations, climbed 15 percent to
$1.96 billion.During the first half of this year, the airline booked $12.86
million in losses from currency exchange, while in the same period last year
the firm was still posting profits of $1.4 million from it.
Less number of pilot. As we know Garuda is a big company on
Airlines Industry yet Garuda lacks of pilot. They have less number of pilot

because they have a high standard qualification for their pilots. So it becomes
hard to find the good ones.
c. Opportunities
Indonesians Large Population & Geography. Indonesia has large of
population and Indonesia is not a poor country. The Geography of Indonesia is
so complex, there are so many provinces in Indonesia. This will gave the
opportunity for Garuda to increase their sales.
International Expansion Routes. Wide network of Garuda Indonesia is
an opportunity to expansion the International market. So it could increase their
sales.
d. Threat
Competitors. For domestic route, Garuda Indonesia has some
competitors but the airline that has a same propose as premium service are
Garuda Indonesia and Batik Air. Batik Air is one of competitor of Garuda
Indonesia for domestic route because they have same positioning as full
service premium airline. For Asean Route, Air Asia is one of competitor for
Garuda Indonesia because Air Asias rate is lower than Garuda Indoenesia.
Fuel Price. The price of fuel is very volatile and Garuda Indonesia can
not adjust its price frequently as the fuel price changes.
Currency. Garuda buy the fuel in dollars currency so when rupiah
becomes weak Garuda has to buy the fuel at the higher price.
Indonesian Market. The main target of Garuda is Indonesian people, so
the market its very depending on Indonesian people buying power.

c. Recommendation

Internal

External

OPPORTUNITY
- Indonesian's Large Population &
Geography
- International Expansion

STRENGTH
- Good Services
- Good Management
- Good Brand
- Good Pilot
- Enhance cooperation w/
International Airways for
International Expansion

WEAKNESS
- Less Number of Pilot
- Finance (Loss)

- Hiring More Pilot


- Cost Efficiency

- Strengthen western hub (Medan)


THREAT
- Competitor
- Fuel Price
- Currency
- Indonesian Market

- Citilink
- Adding More SBU (Fuel)
- Garuda Indonesia Experience

Source :
https://www.garuda-indonesia.com/jp/en/investor-relations/about-garudaindonesia/corporate-profile/history/index.page?
https://www.garuda-indonesia.com/jp/en/investor-relations/about-garudaindonesia/corporate-profile/index.page?

http://www.traveloka.com/fullsearch?ap=BDO.DPS&dt=09-032015.NA&ps=1.0.0
http://www.ainonline.com/aviation-news/air-transport/2014-02-12/garudaprepares-expansion

CASE STUDY I

Garuda Prepares for Expansion


by Neelam Mathews
-

February 12, 2014, 3:55 AM


http://www.ainonline.com/aviation-news/air-transport/2014-02-12/garuda-

prepares-expansion
As Indonesias national carrier Garuda initiates efforts to enhance service through
increased frequencies and destinations, in anticipation of its move to join the
SkyTeam global alliance in March and the ASEAN Open Skies in 2015, it is looking
at adding around 200 to 250 aircraft to its fleet between 2015 and 2025.
The carrier, which is to soon finalize its plans for a mix of narrow- and widebody
aircraft, is expected to seek board approval this year to increase its fleet to 350 to 400
from its present 133 by 2025, CEO Emirsyah Satar told Reuters in Hong Kong.
Garuda has 110 aircraft on order, including 50 Airbus A320neos and Classics, 17
Airbus A330-300s, 25 ATR72-600 turboprops, plus six each of the Boeing 777ER and
CRJ-1000NG regional jet. By the end of this year, it expects to have a fleet of 128, up
from its present 110.
The airline has secured $200 million in loans from banks to fund expansion of its
fleet. Plans to conduct a rights issue in this years first quarter, with an aim to raise
$163 million, have already been approved by shareholders. For 2014, it plans to
allocate $325 million in capital expenditure for business expansion. About half of this
amount should originate from funds generated through the rights issue, according to
a report by private equity firm Indonesia Investments.
Garuda obtained a $1.7 billion loan from Industrial and Commercial Bank of China
(ICBC) in October, with the airline selling and leasing back from ICBC six Airbus
320s, which will be operated by its budget subsidiary Citilinktaking that carriers
fleet to 32 by year-endplus five Boeing 777-300ERs for its mainline fleet.
Capacity expansion to North Asia will be made mainly with the new 777-300ERs.
Plans to start a five-times-a-week service to London in November were delayed due
to the pavement classification number (PCN) of the runway at Jakartas SoekarnoHatta Airport with a 120-ton PCN as against the 132-ton PCN required for operating a
full-capacity 777-300ER. To make that flight, Garuda will still need a restricted
takeoff weight and a reduction of 39 passengers and cargo. Service to Amsterdam is

planned for 2015.


Regional connectivity to remote airports with shorter runways is being enhanced with
the delivery of the first two of 25 ATR72-600s. The aircraft stand out as one of the
best choices for short-haul flights and operations between the various islands of
Indonesia[They] will providethe lowest operating costs for regional networks,
said Filippo Bagnato, CEO of ATR. Under a 10-year global maintenance agreement,
ATR will maintain the fleet from its customer support center in Singapore, while
ensuring availability of key spare parts, such as propellers and fuel nozzles.
Challenges remain, however. With a plunging rupiah (the current rate to the U.S.
dollar exceeded 12,000 in January), there is a need to increase capital for growth as
Garuda plans to maintain an average age of aircraft, said Emirsyah Satar, president
and CEO. Also untapped are Islamic funds that are spreading to airlines, not just in
the Middle East but in other countries.
Garuda has experienced a transition from being banned from flying to the EU, to
becoming one of two Indonesian carriers removed from the blacklist. Regional hubs
and mid-sized cities are emerging, but infrastructure for airports is not keeping pace.
The market is growing in the next ten years. It is not just about airports, but also
about infrastructure for pilots and engineers. It takes longer to build engineers than
pilots, said Satar, alluding to the ASEAN Economic Community that is to come into
being in 2015 with the aim of liberalizing air travel between the 10 member countries,
which is expected to further raise competition. Concerns remain, however. Satar said,
It is not a level playing field. Chinese airlines can fly anywhere to ASEAN, but
carriers here can fly only to certain points in China

CASE STUDY II

Garuda Indonesia Cancels Intl Expansion Plans Amid Loss


Nadya Natahadibrata, The Jakarta Post, Jakarta | Business | Thu, July 31 2014, 1:21
PM
http://www.thejakartapost.com/news/2014/07/31/garuda-indonesia-cancels-int-l-

expansion-plans-amid-loss.html

Financial safety net law guarantees RIs financial system: Minister


Depreciating rupiah brings potential benefits to manufacturing, service sector
industries: Minister China's February imports sink in news sign of weakness
Publicly listed national flag carrier Garuda Indonesia is canceling this years
plans to open two new international routes JakartaManila and JakartaMumbai
as the company suffered from increasing losses during the first half of this year, a
Garuda senior executive said.As previously reported, the state-owned enterprise
recorded a loss of US$211 million from January to June, almost 20 times greater than
a $10.92 million loss booked in the same period last year.According to Garudas vice
president for communications Pujobroto, the airline is forced to take efficiency
measures to cope with rising costs that had put pressure on the firms expansion plans.
With a weaker rupiah and an increase in fuel prices, Garuda had to cope with
increasing operational costs, of which 40 percent was used to pay for fuel, he said.The
firms financial report released last week showed that Garudas revenue rose 0.7
percent to $1.74 billion this half, while its expenses, which include flight operations,
climbed 15 percent to $1.96 billion.During the first half of this year, the airline
booked $12.86 million in losses from currency exchange, while in the same period
last year the firm was still posting profits of $1.4 million from it.With the current
conditions, we have to cancel our plan to open a new route to Mumbai, India this year,
as well as the plan to open to new route to the Philippines, Pujobroto said in a recent
media briefing. The airline had previously planned to open the new routes during the
second half of this year.
As part of its efficiency campaign, the countrys flag carrier also planned to
close its less profitable routes, including Jakarta-Taipei, starting in Aug. 10 this year,
Pujobroto said.In anticipating the downturn, the airline will also reduce the companys
capital expenditure by $54 million this year, as well as temporarily cease the
operation of its more fuel-intensive aircraft and delay the arrival of new aircraft it has
ordered.Garuda currently operates a total of 149 aircraft, including Boeing 777300ERs, Airbus A330-200/300s, Boeing 737-800NGs, Bombardier CRJ 1000
NextGens and ATR 72-600s, that have an average age of five years.By joining

SkyTeam earlier this year, Garuda has improved its connectivity, he said. Therefore,
even though we have a plan to close the Taipei route we will sign a code share
agreement with China Airlines [a member of SkyTeam], so we can still fly our
passengers from Jakarta to Taipei, he added, explaining that the daily routes load
factor was only around 50 to 60 percent.