Garuda Aircraft Rental Prices Are 4 Times More Expensive Than The World Average, Erick Thohir: Must Be Able To Negotiate

JAKARTA - Garuda Indonesia's flight rental price is four times more expensive or 26 percent of the world's average price. SOE Minister Erick Thohir also highlighted the ability of Garuda's directors to negotiate with the lessor regarding the aircraft leasing.

Erick said that in the aircraft procurement process, the lessors realized that the price they set for Garuda Indonesia was expensive. Erick Thohir assessed that the plane rental price, which was relatively expensive, was a form of discrimination in business.

Erick also said that the negotiation efforts carried out by Garuda Indonesia's management were still very weak. Therefore, he asked the directors of the issuer coded GIAA to be literate in negotiations.

"Perhaps these lessors realized that when they did that, Indonesia's rental rates discriminated against other countries. Of course, what should we correct? The directors of Garuda are also aware of negotiations, as well as the turmoil in the world economy. We ministers must be brave. at the forefront of negotiating for our nation," he said at the Digital Technopreneur Fest & Socio Technopreneur Campus event, Friday, November 19.

As previously reported, Erick said that currently Garuda Indonesia's subsidiary, Citilink Indonesia, is following the steps of its parent company to return 3 of its aircraft to the lessor.

According to Erick, currently Citilink Indonesia only operates 44 aircraft from its 61 aircraft fleet. In fact, Erick revealed that the possibility of reducing the aircraft will continue to be carried out by shareholders if the price and interest for aircraft rental are still high.

"I have checked Citilink. I have 61 aircraft, 3 are taken by the lessor. I have spoken with the President Director, yes, if the price is too expensive, take it. But Citilink from 61 aircraft is also taken by the lessor, there are 14 that are maintenance and 44 are still flying," he said.

For your information, Garuda Indonesia's aircraft rental, which is much more expensive than the market price, has been in the spotlight of various parties. Regarding the price of the plane, the Deputy Minister of BUMN II Kartika Wirjoatmodjo admitted that the rental price for Garuda aircraft was four times more expensive than the global average.

However, Tiko, as he is familiarly called, said that the reason for the more expensive plane rental prices was due to poor corporate governance. It is known that the KPK decided that there were corruption cases in Garuda Indonesia in the past.

"This also causes contracts with lessor Garuda to be quite high compared to other airlines. There is even data from Bloomberg if we compare Garuda's aircraft rental cost with Garuda's revenue, which is among the largest," he said in a meeting with Commission VI DPR, Tuesday. , November 9th.

"So the aircraft rental cost divided by Garuda's revenue reaches 24.7 percent, four times the global average. This is Garuda's condition," he continued.

Therefore, said Tiko, the reason for Garuda's declining performance is due to past corruption. Then, it was made worse by the COVID-19 pandemic.

"This is a difficult situation. Because on the one hand, Garuda has a high cost structure, high debt, and a significant eroded revenue base due to the pandemic. So I am often asked what Garuda's performance has decreased because of corruption or the pandemic? Yes, two "Both, not one," he said.