Garuda Indonesia & Citilink Seek Global & Domestic Expansion
Indonesian flag carrier Garuda Indonesia, the nation's top class airline, targets to fly 27.5 million people in 2016, up 10 percent year-on-year (y/y) from the airline's total number of air passengers last year. Passenger growth is supported by the arrival of five new wide-body airplanes in 2016. The company, listed on the Indonesia Stock Exchange but majority-owned by the Indonesian government (60.6 percent), is particularly eager to boost the number of international passengers.
Arif Wibowo, General Director of Garuda Indonesia, said the airline is eager to expand internationally, hence raising the number of international passengers to 10 million in 2016 (up 67 percent from realization one year earlier). With the arrival of five new aircraft (one Boeing 777-300ER and four Airbus 330-300 units), growth in available seat kilometers (ASK) for its international routes is expected to grow 30 percent. The Airbuses will be used for flights to Australia, while the Boeing will fly to several nations (including Saudi Arabia, Japan, China and South Korea). Although increasing its focus on international routes, Wibowo emphasized that Garuda Indonesia will not reduce its focus on domestic expansion. However, domestic expansion will primarily be done through its low-cost subsidiary Citilink Indonesia.
Citilink Indonesia targets to see a 30 percent growth pace in passenger numbers this year to 12.6 million supported by an increase in flights in Java and Sumatra, Indonesia's two most populous islands. The fleet of Citilink currently numbers 44 airplanes, while eight more (narrow body units) are scheduled to be delivered in late-2016. According to Wibowo, Citilink is well-equipped to compete with airlines such as Lion Air and Indonesia AirAsia and is projected to raise its market share in terms of domestic air passengers at the expense of its competitors. Together, Garuda Indonesia and Citilink Indonesia are projected to command a 50 percent domestic market share this year, up from 44 percent last year.
As such, the Garuda Group (Garuda Indonesia plus Citilink Indonesia) targets to see a 16 percent growth to 40.1 million air passengers in 2016.
Air Passengers Garuda Indonesia & Citilink Indonesia:
| 2015 |
2016 | YoY Growth |
|
| Garuda Indonesia (in millions) |
25.0 | 27.5 | +10% |
| Citilink Indonesia (in million) |
9.7 | 12.6 | +30% |
| Garuda Group (in millions) |
34.7 | 40.1 | +16% |
Source: Garuda Indonesia
International ratings agency Fitch Ratings expects Garuda Indonesia to fly 49 million passengers by 2018, while generating a yield of 7.25 cents from each passenger during the year. The rating agency also sees Garuda Indonesia filling 77 percent of its total available seats in 2016, while increasing the load factor to 78 percent by 2018. Due to expected improved profitability (partly due to lower oil prices and the company's cost-efficiency steps implemented last year) Fitch decided to discard its negative outlook on Garuda Indonesia's debt rating and upgraded it to stable.
Based on the latest data from Statistics Indonesia (BPS), the number of domestic air passengers in Indonesia grew 16.7 percent (y/y) to 68.8 million in full-year 2015. Meanwhile, international air passengers rose just 0.3 percent to 13.7 million over the same period.
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