LONDON – Financially-struggling airline Garuda Indonesia could pull the plug on selling first-class flights and potentially pull more, if not all, international routes as the airline looks inward at the large domestic market.
Award-winning service cut
Inefficient state-owned airline Skyteam will focus its domestic market on business, premium economy and economy class seats as its domestic air travel market is large enough to hold its own.
In addition, Erick Thohir, Minister of State Enterprise, stated in an interview that it is better suited for the Indonesian market.
The minister claimed that Garuda Indonesia will unfortunately take advantage of most international routes to save costs. However, some routes will continue to be flown, such as the pilgrimage flights to Saudi Arabia.
Minister Thohir stated: “Garuda has had the wrong business model in the past with its leasing costs well above the industry average so we need to fix that.” International flights can still be served through code-share agreements with other airlines, he added .
Garuda Airlines is gradually expanding its operations to meet the goal of returning to operating profits in 2023. The airline is currently undergoing about $9.5 billion in debt restructuring.
The Indonesian state airline has successfully contained its loss in the first quarter of the year and plans to increase its fleet from 30 to 120! This signals to the airline that the fleet is returning to its pre-pandemic size. The return to pre-pandemic height may not include his wide frame.
The airline plans to acquire more aircraft from lessors recommended by OEMs such as Airbus or Boeing, the minister added. The minister is very optimistic and optimistic that the airline will make the right decisions in aircraft deals since Indonesia itself has a large aviation market.
The minister announced that up to 1,800 passenger planes will fly in the Southeast Asian archipelagic state in the near future.
Revision of aircraft orders
The Indonesian national carrier is willing and able to revise a deal for its previously inked 49 Boeing 737MAX jets that have yet to be delivered to the airline. The possible outcomes of the negotiated contract may delay delivery dates or reduce order size.
Kartika Wirjoatmodjo, deputy minister for state-owned enterprises, said in the middle of the year, “Boeing wanted us to honor our commitment to purchase Max.” The statement was made when the minister met with Boeing officials earlier this year.
“We want them, just like Airbus, to renegotiate by postponing deliveries or reducing 737 Max orders. You don’t want it. Whether we like it or not, we might have to settle it in an American court, we have to do Chapter 15.”
The airline also said it grounded the Boeing 737 MAX in early 2019 following the two incidents involving Ethiopian and Lion Air that led to the model’s global grounding.
The airline’s creditors, which included aircraft lessors, gave the green light earlier this year to a plan to restructure its debt, which totals about $9.5 billion, or 142 trillion rupiah.
The Indonesian government has agreed to give the company more financial cap as both parties look to capitalize on pent-up demand and air travel recovery.
What will the Indonesian airline’s fleet composition look like? Or does the national carrier only see all narrow body fleets with one or two wide bodies for Hajj flights?