Garuda
Beyond a ‘quantum leap’
Cyrillus Harinowo Hadiwerdoyo, An Economist
SUMBER : JAKARTA POST, 11 April 2012
On the evening of March 4, I
was surprised to see how full the Garuda flight that would take me from Jakarta
to Amsterdam was.
I was sitting in the sixth row, which I thought would be quite far from the other passengers.
I was wrong. All 36 business class seats on that Airbus 330-200 were occupied. Similarly, economy class was also almost full. All in all, that flight was filled up with a load factor of almost 100 percent. It is really incredible that at a time when Europe is suffering a crisis, a Garuda flight to Amsterdam experienced such a high load factor.
I was even more surprised to see that more than 70 percent of the passengers were Caucasians.
A Reistaffel menu with famous dishes dating to colonial times was served on that flight, with dishes coming from various regions in Indonesia. Apparently that menu satisfied the palates of many Dutch passengers that crowded the flight.
Such a feeling was reminiscent of the flights that I enjoyed from Melbourne and Sydney to Denpasar a few years back — being a minority on my own national airline but at the same time also feeling pride for the popularity of Garuda among the foreign passengers.
With that experience, I was fully aware of the situation that national flag carrier Garuda Indonesia is no longer popular only in the domestic market, but also on the international routes.
Later, I was told by the management of Garuda that its flights to Australia, Japan, the Middle East and to neighboring countries such as Singapore, Malaysia and Hong Kong, have become profitable. The average load factor of its flights to Amsterdam has now reached almost 80 percent, relatively high when compared to the European economic condition.
It is with that background that I learned during the flight back from Amsterdam that Garuda was just chosen as the best airline according to one aviation consulting firm from Australia.
This accolade strengthened the praise the airline received from another aviation consulting firm from Australia, the Center for Asia Pacific Aviation, known as CAPA. A few years earlier, CAPA announced that based on their survey of thousands passengers, Garuda Indonesia scored the best, even compared to the famous Singapore Airlines, as well as other five-star airlines.
With such a background, it is no surprise that Garuda’s financials also support the facts. For 2011, Garuda Indonesia posted a profit of Rp 858 billion (US$93.52 million). Such a performance was a turnaround from their performance in the first half of the year, in which Garuda still suffered a significant loss.
However, the third quarter of that year Garuda was able to wipe out the entire loss and the airline even showed a significant profit. In the fourth quarter, the profit from the Haj business, as well as year-end traffic, finally enhanced their profits so that overall profits for the whole year were almost $100 million. The management continues to be optimistic that, even though 2012 is a challenging year, Garuda will weather the headwinds in its passage.
Garuda is also enjoying a high growth in its number of passengers. With a fleet of almost 80 aircraft, Garuda was able to enjoy 36 percent growth in the number of passengers flown. In 2011, Garuda flew 17.1 million passengers, of which 3.2 million were on international routes. With average revenue higher than the low-cost airlines, Garuda enjoyed total revenue of Rp27.2 trillion in 2011. This figure is three times higher than its strongest competitor in the low-cost business.
So what can be expected from the airline in the medium term?
With such a colorful experience, Garuda is predicted to rise to become an awakening giant in Southeast Asia. The fast-growing Indonesian economy is certainly the main impetus for such optimism.
In addition, the fast-growing middle class has provided a very strong tailwind for the prospects of the company. Many cities in Indonesia have shown remarkable growth so that traffic to those regions has increased remarkably.
I always use Pontianak, the capital of the West Kalimantan, as a good example. Four years ago, there were no Garuda flights to that city after the company ceased its operations to that city several years earlier. But the pull of the business growth in Pontianak was eventually responded to by the company by reintroducing one flight a day.
Within a few months it was realized that one flight a day was not adequate. Therefore, the company quickly added another flight, making two flights a day.
Again, in a few months time such a frequency was judged too low for that city. It was really amazing that Garuda Indonesia had to increase the frequency to three flights a day in the same year. Now five flights to Pontianak are scheduled a day and on many occasions the flights have also been full.
The growing importance of the Indonesian economy in ASEAN, of which the Indonesia share of GDP has increased from just 27 percent in 2000 to almost 40 percent in 2011, has propelled Garuda to such a remarkable position. If in the beginning of its transformation Garuda based itself on a quantum leap strategy, apparently, these years have seen that Garuda could even go beyond a quantum leap.
If in the beginning of such an optimistic strategy Garuda was planning to have 154 aircraft in 2014, apparently such an ambitious fleet size will be exceeded by its recent plan to aim for 194 planes in the same year. With such an ambitious plan, Garuda has to race with a shortage of manpower. It is quite a coincidence that the retrenchment of other airlines in the region could fill the gaping hole of such pilot needs.
In the medium term, with the arrival of a number of new wide body aircrafts, such as the Boeing 777 ER starting in 2013, Garuda will also enjoy an expansion of its international routes. While it remains unclear at this juncture, I can predict that several large cities in Europe, such as London, Paris and Frankfurt, will become the next destinations for Garuda with the arrival of new jets.
In fact, several cities in the United States, such as Los Angeles or San Francisco or both, may also become part of Garuda’s ambitious expansion plan.
If that will be the case, Garuda is really embarking not just on a quantum leap strategy, but truly a strategy beyond the quantum leap. The airline’s performance in the last few years was really a testimony that Garuda might be able to realize its ambitious goal sustainably.
It is with such pride that I watch Garuda fly higher day by day. ●
I was sitting in the sixth row, which I thought would be quite far from the other passengers.
I was wrong. All 36 business class seats on that Airbus 330-200 were occupied. Similarly, economy class was also almost full. All in all, that flight was filled up with a load factor of almost 100 percent. It is really incredible that at a time when Europe is suffering a crisis, a Garuda flight to Amsterdam experienced such a high load factor.
I was even more surprised to see that more than 70 percent of the passengers were Caucasians.
A Reistaffel menu with famous dishes dating to colonial times was served on that flight, with dishes coming from various regions in Indonesia. Apparently that menu satisfied the palates of many Dutch passengers that crowded the flight.
Such a feeling was reminiscent of the flights that I enjoyed from Melbourne and Sydney to Denpasar a few years back — being a minority on my own national airline but at the same time also feeling pride for the popularity of Garuda among the foreign passengers.
With that experience, I was fully aware of the situation that national flag carrier Garuda Indonesia is no longer popular only in the domestic market, but also on the international routes.
Later, I was told by the management of Garuda that its flights to Australia, Japan, the Middle East and to neighboring countries such as Singapore, Malaysia and Hong Kong, have become profitable. The average load factor of its flights to Amsterdam has now reached almost 80 percent, relatively high when compared to the European economic condition.
It is with that background that I learned during the flight back from Amsterdam that Garuda was just chosen as the best airline according to one aviation consulting firm from Australia.
This accolade strengthened the praise the airline received from another aviation consulting firm from Australia, the Center for Asia Pacific Aviation, known as CAPA. A few years earlier, CAPA announced that based on their survey of thousands passengers, Garuda Indonesia scored the best, even compared to the famous Singapore Airlines, as well as other five-star airlines.
With such a background, it is no surprise that Garuda’s financials also support the facts. For 2011, Garuda Indonesia posted a profit of Rp 858 billion (US$93.52 million). Such a performance was a turnaround from their performance in the first half of the year, in which Garuda still suffered a significant loss.
However, the third quarter of that year Garuda was able to wipe out the entire loss and the airline even showed a significant profit. In the fourth quarter, the profit from the Haj business, as well as year-end traffic, finally enhanced their profits so that overall profits for the whole year were almost $100 million. The management continues to be optimistic that, even though 2012 is a challenging year, Garuda will weather the headwinds in its passage.
Garuda is also enjoying a high growth in its number of passengers. With a fleet of almost 80 aircraft, Garuda was able to enjoy 36 percent growth in the number of passengers flown. In 2011, Garuda flew 17.1 million passengers, of which 3.2 million were on international routes. With average revenue higher than the low-cost airlines, Garuda enjoyed total revenue of Rp27.2 trillion in 2011. This figure is three times higher than its strongest competitor in the low-cost business.
So what can be expected from the airline in the medium term?
With such a colorful experience, Garuda is predicted to rise to become an awakening giant in Southeast Asia. The fast-growing Indonesian economy is certainly the main impetus for such optimism.
In addition, the fast-growing middle class has provided a very strong tailwind for the prospects of the company. Many cities in Indonesia have shown remarkable growth so that traffic to those regions has increased remarkably.
I always use Pontianak, the capital of the West Kalimantan, as a good example. Four years ago, there were no Garuda flights to that city after the company ceased its operations to that city several years earlier. But the pull of the business growth in Pontianak was eventually responded to by the company by reintroducing one flight a day.
Within a few months it was realized that one flight a day was not adequate. Therefore, the company quickly added another flight, making two flights a day.
Again, in a few months time such a frequency was judged too low for that city. It was really amazing that Garuda Indonesia had to increase the frequency to three flights a day in the same year. Now five flights to Pontianak are scheduled a day and on many occasions the flights have also been full.
The growing importance of the Indonesian economy in ASEAN, of which the Indonesia share of GDP has increased from just 27 percent in 2000 to almost 40 percent in 2011, has propelled Garuda to such a remarkable position. If in the beginning of its transformation Garuda based itself on a quantum leap strategy, apparently, these years have seen that Garuda could even go beyond a quantum leap.
If in the beginning of such an optimistic strategy Garuda was planning to have 154 aircraft in 2014, apparently such an ambitious fleet size will be exceeded by its recent plan to aim for 194 planes in the same year. With such an ambitious plan, Garuda has to race with a shortage of manpower. It is quite a coincidence that the retrenchment of other airlines in the region could fill the gaping hole of such pilot needs.
In the medium term, with the arrival of a number of new wide body aircrafts, such as the Boeing 777 ER starting in 2013, Garuda will also enjoy an expansion of its international routes. While it remains unclear at this juncture, I can predict that several large cities in Europe, such as London, Paris and Frankfurt, will become the next destinations for Garuda with the arrival of new jets.
In fact, several cities in the United States, such as Los Angeles or San Francisco or both, may also become part of Garuda’s ambitious expansion plan.
If that will be the case, Garuda is really embarking not just on a quantum leap strategy, but truly a strategy beyond the quantum leap. The airline’s performance in the last few years was really a testimony that Garuda might be able to realize its ambitious goal sustainably.
It is with such pride that I watch Garuda fly higher day by day. ●
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