Erick Thohir's Deputy Brings Bad News: Garuda Will Temporarily Stop International Routes To Amsterdam, London, Etc

Garuda Indonesia aircraft. (Photo: Wikimedia Commons)

JAKARTA - The Ministry of SOEs has decided to temporarily suspend a number of international flight routes for PT Garuda Indonesia (Persero) Tbk. Meanwhile, this step was taken as part of efforts to save the business of the national airline company. Meanwhile, Garuda will focus on working on domestic routes.

Deputy Minister of SOEs II, Kartika Wirjoatmodjo said that Garuda Indonesia's international flight routes would be significantly reduced and the volume of cargo still considered adequate. Instead, shareholders are refocusing international routes to domestic ones. This effort will be carried out on a massive scale.

Furthermore, Tiko said Garuda will focus on premium routes. Garuda's routes have also decreased from 237 routes to 140 routes. Tiko admitted, this is a challenge because many airports will experience a decrease in the number of Garuda flights.

"We have significantly reduced international services, and only a few international ones are being serviced, mostly because of the good volume of cargo, so we will not have long hold routes such as Amsterdam, London, etc. shut down, quiet routes such as Korea has also been shut down. So we leave an adequate volume of cargo," he said in a meeting with Commission VI of the DPR, Tuesday, November 9.

Meanwhile, said Tiko, of the 142 aircraft units owned by Garuda, currently, only 50-60 units are operating. The aircraft is operated on potential routes, such as the domestic destination of Denpasar, Bali.

"We have received many complaints over the past month that Garuda flights have become increasingly scarce, because the planes are grounded. So later this will become an issue because we are very selective in surveying certain routes, indeed, in terms of profitability, above the existing cost structure from Garuda," he explained.

Some of Garuda's planes have also been returned to lessors, especially aircraft such as the Boeing 737. Currently, Garuda operates mostly wide-body aircraft.

"What's interesting is that the 737 is efficient, it's the smaller 737 that is mostly taken by lessors, that's why we use a lot of widebody aircraft, namely the Boeing 777 and A330 (Airbus). If we go to Denpasar now, the 777 widebody aircraft, although it is not as efficient as the 737," he said.

Not only that, but Tiko said Garuda was also reducing the number of planes. By 2022, the number of the fleet will only be 134. The number was significantly reduced from previous years.

"The number of aircraft will also decrease drastically, from 202 aircraft (2019) to around 134 aircraft in 2022 because some have been grounded by lessors. And it is hoped that in the future it will grow again if the business plan runs around 188 aircraft (2026)," he said.

On the other hand, Tiko said that his party will also renegotiate the lease contract for the aircraft used by the issuer with the GIAA code in the future. The goal is to adjust the cost of aircraft rental with current market rates. Then, increase the contribution of cargo revenue through increasing belly capacity utilities and digitizing operations.