Limping To Rise From Destruction, Garuda Indonesia Flights Are Getting Rare, Deputy of SOE: Only 60 Aircraft Units Are Operating

Garuda Indonesia aircraft. (Photo: Wikimedia Commons)

JAKARTA - PT Garuda Indonesia Tbk's flight schedule has been getting eroded lately. This is because the number of Garuda Indonesia aircraft operating is not much. Of the total 142 aircraft in operation, now only 50-60 aircraft remain.

Deputy Minister of State-Owned Enterprises II Kartika Wirjoatmodjo confirmed that Garuda's flight schedule is currently increasingly scarce. This is because the majority of the existing aircraft are grounded or grounded.

"Garuda is the most drastic of its 142 planes, currently there are only 50-60 aircraft operating. So we have received many complaints over the past month Garuda flights are getting rarer because the planes are grounded," he said in a working meeting with Commission VI of the House of Representatives (DPR), Tuesday, November 9.

According to him, his party and the management of Garuda Indonesia will be very selective in serving certain routes, indeed on a profitability basis, above the existing cost structure from Garuda.

Furthermore, Tiko, as the Deputy Minister of BUMN is familiarly called, explained that of the many types of aircraft previously owned by Garuda, the Boeing 737, which was more efficient in terms of operation, was the one that was mostly taken by lessor companies.

According to Tiko, this is also what makes this national airline only use the widebody Boeing 777 and 330 which carry more passengers, although not as efficiently as the Boeing 737.

"What's interesting is that the 737 is efficient, it's the smaller 737 which is mostly taken by lessors, that's why we use a lot of widebody aircraft, the 777 and 330. If you go to Denpasar now, there are many 777 widebody aircraft, although they are not as efficient as the 737," he explained.

Meanwhile, Tiko said that Garuda's subsidiary, Citilink, is still relatively stable in terms of aircraft ownership, with the majority being the A320 type. The aircraft type and aircraft ownership by Citilink will remain.

The background of Garuda Indonesia's condition

Tiko explained that the background of Garuda's current condition is a combination of two aspects in the past. The first is because of poor corporate governance which makes the cost structure uncompetitive.

In fact, he said, there are corruption cases that have also been decided by the Corruption Eradication Commission (KPK) regarding the contract value of the aircraft.

Tiko said that the contract value of this aircraft caused the number to be quite high compared to other airlines. In 2019, the issuer with the stock code on GIAA was actually able to generate profits from domestic routes even though it was losing money on international routes. At that time, Garuda could still make a profit of 240 million US dollars.

The second is the COVID-19 pandemic. Tiko explained that Garuda's condition, which was improving at that time, had to experience pressure again due to the pandemic. Therefore, Garuda had to struggle with a cost structure and a significant drop in revenue. If in 2019 the number of GIAA passengers had touched 235 million, now it is only 70 million people.

"Garuda, every time there is a tightening of movement or PCR and so on, this will be directly affected. Because indeed the passengers who board will decrease significantly, currently in the range of 70 million. If we look at it, actually in December 2020 it reached 100 million, and then it was tightened down again," he said.

According to Tiko, currently, it is very difficult to predict Garuda's cash flow or cash flow because it is very dependent on the recovery of COVID-19 conditions in the country.

"This is a difficult situation. 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. So it was affected because both of them made Garuda's current condition not good," he said.