(eTN) in Jakarta/Amsterdam – It was an important day last Wednesday for Garuda. In the early 2000s, Indonesia’s national carrier was plagued by debts, forcing it to cut both aircraft and network. In the autumn 2004, Garuda pulled the plug on its Jakarta-Amsterdam daily flight, with the promise to be back when things were better. “After a six-year hiatus, we are glad to see Garuda … back in Amsterdam, as it is an essential Asian carrier for Schiphol[‘s] hub strategy,” explained Pieter Verboom, executive vice president of Schiphol Group and owner of Amsterdam airport, at the opening ceremony.
Garuda’s return to Amsterdam illustrates the amazing turn-around of the Indonesian carrier over the last five years. “In 2005, we were into a strategy of survival, as we were still losing some US$75 million. Last year, we made a profit of US$125 million, the highest in our history,” explained Emirsyah Satar, president and CEO of Garuda Indonesia. For Mr. Satar, Garuda’s good performances hang not only to its successful restructuring but also to the Indonesian economy. “Indonesia is less internationally exposed than other economies. The country was the only one with China to show positive growth in GDP in the region last year,” he said.
Amsterdam is Garuda’s first step in rebuilding its long-haul international network. “Europe plays an integral role in our five-year ‘Quantum Leap’ strategy, which will see Garuda pursuing an ambitious growth strategy both internationally and domestically,” added the airline’s CEO. The airline has set up 2014 as its target to achieve new heights. Passenger traffic is planned to grow from 10.8 million for Amsterdam to 27.56 million in 2014; fleet growth is planned to go from 54 to 116 aircraft; and profits to go up from US$125 million to US$410 million. “Our fleet will only have three types of aircraft – Boeing 737-800 for short-haul and regional flights, Airbus A330-200 for medium-haul flights, and the Boeing 777-300ER for long-haul flights,” added Mr. Satar. Garuda hopes to launch an Initial Public Offering (IPO), which should raise US$300 million to support its fleet expansion.
European destinations which Garuda Indonesia intends to add to its fast-growing network over the next four years includes Frankfurt, London, Paris, and Rome. “We cannot tell in which order we will serve those routes. However, Frankfurt is likely to be added next year as there is a high demand out of Germany,” said Mr. Satar. The airline is also looking to go back to Los Angeles.
In contrary to its previous long-haul experience in Europe and the USA, Emirsyah Satar is confident it will make profits on those routes. “Conditions are very different today. Indonesia’s middle class is booming, we are more cost-driven than six years ago, we have efficient aircraft, and our product with its new business class matches the best standards in the industry,” told Garuda’s president. Skytrax recently distinguished Garuda with a four-star status due to its service excellence and named it the “world’s most improved airline.”
Strengthening Garuda’s business will also go through an expanding presence regionally. “We plan to open regional bases in important Indonesian cities such as Medan, Surabaya, or Makassar. We will first start with direct flights, bypassing our hubs in Bali and Jakarta, such as Medan-Surabaya or Medan-Makassar. Then we will start to fly regional routes,” Mr. Satar said. The next step will be the airline joining an alliance. “We strongly support Garuda entering Skyteam, as we have a long experience of cooperation together,” explained Peter Hartman, CEO of KLM. No date has been given, however, to a possible Garuda entry into Skyteam. “But we are processing forward with the conditions to Garuda’s future membership,” he said.