JAKARTA - Minister of State-Owned Enterprises (BUMN) Erick Thohir admitted that there was an error in the business management of PT Garuda Indonesia (Persero) Tbk (GIAA). This error caused the state-owned airline to experience debt accumulation which amounted to more than Rp. 70 trillion.
However, said Erick, these mistakes can be a valuable lesson. According to Erick, the territory of Indonesia, which is an archipelagic country, must be used by the aviation industry to maintain its business. Moreover, the mode of air transportation is the only one that can quickly connect between islands.
"Especially for Garuda, this is indeed a mistake that we also didn't mean to do anything, but indeed we want to be a part that must learn. That what? Indonesia is a very strong domestic market," he said in a virtual dialogue on IDX Channel, quoted Friday, September 17.
Erick said, before the outbreak of the COVID-19 pandemic, as many as 78 percent of airplane passengers were domestic tourists or Indonesian citizens (WNI). While the rest are foreigners and foreign tourists.
From the number of local passengers, the circulation of money reaches Rp. 1,400 trillion. With the size of the domestic market, said Erick, Garuda Indonesia should be able to take advantage of it to maintain its business sustainability.
Therefore, Erick ensured that in the future Garuda Indonesia will focus more on working on domestic flight routes rather than overseas.
"So indeed later we will focus on domestic flights only. This is for business model changes," he said.
In addition, Erick revealed that another obstacle faced by management was the large aircraft rental burden to the lessor. The total amount reached 28 percent of the total operating expenses borne by the company.
Moreover, said Erick, there are aircraft leases to lessors which are indicated to be carried out for the benefit of high-ranking company officials. Because, based on the findings of the Corruption Eradication Commission (KPK) there are indications of corruption.
"We are trying to renegotiate, but Garuda is the toughest condition and we can see that in many countries the same thing is being done," he said.
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