Tourism & Aviation: Garuda Indonesia Opens New Route to China
Indonesia's national flag carrier Garuda Indonesia is ready to open a new flight route between the famous island of Bali and Chengdu (the provincial capital of Sichuan province in Southwest China) in order to cater Chinese passengers going to Bali. Arif Wibowo, General Director of Garuda Indonesia, informed that this new international route is scheduled to be opened in January 2017. He added that Chengdu has great potential in terms of boosting foreign tourist arrivals to Bali. Garuda Indonesia already flies passengers from Beijing, Shanghai and Guangzhou to Jakarta.
Garuda Indonesia, a state-controlled airline that is listed on the Indonesia Stock Exchange, is expanding flight routes (both international and domestic ones) in order to boost passenger growth by 10 percent year-on-year (y/y) in 2016. Last year, Garuda Indonesia carried 19.4 million domestic passengers and 4.2 million international passengers. The airline also aims to open a new route to India in December 2016 as well as the United States in 2017. Domestically, Garuda is focusing on adding new routes in the eastern part of the country.
Currently, Garuda Indonesia serves 17 international destinations, including 14 in the Asia Pacific, two in Europe and one in the Middle East.
Its desire to add international flight routes in 2016 and 2017 is in sharp contrast to Garuda Indonesia's corporate strategies over the past two years when amid challenging market conditions and its weak corporate earnings the airline shelved plans to expand internationally and cut capacity to Australia and Japan. Instead the company increased its focus on the domestic market. Such restructuring proved successful as financial results improved markedly in 2015.
In 2016 the company focused again on international expansion, opening routes to London Heathrow, to China (three routes) and adding capacity to Saudi Arabia. As a consequence Garuda Indonesia's yields and profitability fell in the first half of 2016. Its international passenger yield declined 9 percent (y/y) in the first eight months of 2016.
Garuda Indonesia's faced an operating loss of USD $38 million in the first six months of 2016, compared to an operating profit of USD $78 million in the same period one year earlier. Meanwhile, its net loss stood at USD $63 million, compared to a net profit of USD $29 million in the first half of 2015.
Wibowo stated that the decision to become a member of SkyTeam, a global airline alliance that seeks to improve customer services around the world, was a very positive one for Garuda Indonesia. After becoming a member in 2014 the company experienced a jump in growth, particularly internationally. It currently flies some 120,000 passengers from the SkyTeam.
Performance Garuda Indonesia:
| 2014 | 2015 | Y/Y Growth |
|
| Revenue (in USD million) |
3,933.5 | 3,810.0 | -3% |
| Net Profit (in USD million) |
(370) | 78.0 | 121% |
| Domestic Passengers (in million) |
17.6 | 19.4 | 10.3% |
| International Passengers (in million) |
4.0 | 4.2 | -4.7% |
Source: Garuda Indonesia
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