Erick Thohir Affirms Garuda Must Focus On Domestic Routes

Garuda Indonesia Airplane/UNSPLASH - Fasyah Halim

PALEMBANG - Minister of State-Owned Enterprises Erick Thohir emphasized that Garuda Indonesia should focus on working on the domestic aviation market to improve business performance.

Erick Thohir said Garuda had been stuck in an unhealthy business when it started working on overseas flight routes.

Based on data from Garuda Indonesia, it is known that domestic passengers dominate as much as 78 percent with revenues reaching Rp1,400 trillion. Meanwhile, the number of passengers destined for overseas was only 22 percent with the acquisition of Rp300 trillion.

"Garuda must focus on domestic, I'm sure it will return to health, but it will take a while," said Erick Thohir, quoted by Antara, Sunday, October 24.

Therefore, the Ministry of SOEs continues to oversee the ongoing restructuring process at PT Garuda Indonesia (Persero) Tbk.

However, during the restructuring process, Erick admitted that he was reluctant to negotiate regarding the abuse of authority and corruption.

Garuda was trapped in a mountain of debt of up to Rp70 trillion, so the company suffered losses. The COVID-19 pandemic has also battered Garuda Indonesia's financial performance.

The Ministry of SOEs said that one of the causes of Garuda Indonesia's loss was the agreement on the price of the aircraft from the lessor company.

"Negotiations must be tightened, especially regarding leasing/lessor (providing a fleet of aircraft with a lease scheme) aircraft that are corrupted and the price is too expensive," said Erick.

Erick Thohir assessed that the opportunity to develop into a strong and healthy company lies with Pelita Air Service (PAS), which has been focusing on domestic flights.

Pelita Air can be developed, as long as you don't follow the styles abroad. Because flights abroad can result in unhealthy operations, said Erick.