Comeback kid Garuda Indonesia is Asean’s rising star

garuda imageEveryone loves a comeback kid, and Garuda Indonesia is the newest comeback kid on the aviation block.

The Indonesian flag-carrier has come a long way from a speckled past to becoming the new star of Asean. It is no mean feat for an airline that in June 2007 was banned (along with all other Indonesian carriers) by the European Union (EU) from flying to its member countries over safety issues, and that for a good 50 years or so it has all but maintained a very low profile.

In fact, we hear more of rival Lion Air – Indonesia’s second largest airline after Garuda – and its grand plans to expand across Asia with record plane orders. In the 60s, Garuda flew beyond the region to Amsterdam, Frankfurt, Rome and Prague in Europe, and to Honolulu and Los Angeles in the United States. Services to Amsterdam were resumed a year after the EU in 2009 lifted the ban, but services to the US had long ceased since 1997.

garuda image1 courtesy garuda
Image courtesy of Garuda Indonesia

In the 2013 Skytrax survey, Garuda Indonesia was listed among the world’s best 10 airlines. If that was not impressive enough, consider how it was also ranked fifth in the Asia category, behind Singapore Airlines (SIA), All Nippon Airways, Asiana Airlines and Cathay Pacific – ahead of some other presumably better known brands. There is more: Garuda was voted in the same survey as best economy class, and this is worthy of note considering that many top-rated airlines are reputed for their first and business class but not necessarily for economy which across the industry is increasingly becoming very much the same.

Surely the Indonesian flag carrier must be doing something right. Mr Emirsyah Satar, president and CEO whom I had the privilege to interview, attributed Garuda Indonesia’s success to a strategic 5-year transformation programme known as Qantum Leap implemented in 2009, the same year that the EU lifted its ban on the airline. The makeover gives Garuda a fresh corporate identity complete with new livery, a name change to Garuda Indonesia in full instead of merely Garuda, and new crew uniform. Embedded in the “Garuda Indonesia Experience” that it offers – typified by the warm hospitality inherent in the Indonesian culture at every point of customer contact – is the drive to improve customer’s perception.

emrisyah satar
Image courtesy of Garuda Indonesia

Mr Satar said: “Service experience is what sets us apart.” He added, “We want passengers to experience the warmth of the Indonesian hospitality whenever they fly with us. Before, we were lacking a distinct uniqueness and the idea behind the branding strategy in 2009 was to create a new culture for Garuda based on the traditions and values of Indonesia hospitality.”

What does the rise of the mythical bird to new heights mean to the competition in the region, particularly in the offing of the Asean Open Skies policy which is expected to be fully implemented in 2015?

First, regional carriers including SIA cannot afford to ignore the competition posed by Garuda Indonesia. Going forward, the airline is increasing not only its fleet but also capacity as it expands its network. It will offer more seats between Jakarta and Singapore, which is its largest destination outside Indonesia. Naturally, it can only mean that airlines currently operating the lucrative short route will have to fight harder to retain its market share or generate new demand, the latter case being good news for Changi Airport in terms of traffic growth.

Garuda Indonesia will also be introducing a direct service between Jakarta and London in February next year; the flight was originally scheduled for November this year but has been delayed because of limitations faced by Soekarno-Hatta International Airport. Mr Satar believed that Indonesia is a high growth market for the United Kingdom (UK), a market that is currently underserved. Considering the double-digit growth of traffic carried through other Asian hubs, Mr Satar was confident that Garuda Indonesia is in a dominant position to capture a good share of the market.

However, there is a less rosy flipside for other regional airlines and airports that have hitherto benefited from the connecting traffic of Indonesian travellers if more of them choose to fly direct from Jakarta instead. The impact may be softened by Garuda Indonesia’s scheduled landing at Gatwick instead of Heathrow, but it may all hinge upon how the airline packages its offer in light of the fluid global economy that has made cost a significant driver of consumer behaviour.

Second, product-wise Garuda Indonesia has made strides to match or be nearly as good as some of the best airlines in the industry. Mr Satar said: “It took us a lot of hard work and major restructuring over the last few years but we’re now finally back on track. Customers can continue looking forward to warm exceptional service, high safety standard and cutting-edge technology.” The airline boasts features that are no longer exclusive to its competitors such as comfortable ergonomic chairs, spacious leg room, flexible head rests, individual touch-screen LCDs equipped with Video-on-Demand (VOD) offering a range of movies, music, TV shows and games.

Third, Indonesia being the most populous member nation when Asean Open Skies kicks in should offer Garuda Indonesia home ground advantage. Mr Satar said the airline is in a strong position and ready for the competition. He dismissed Lion Air as a veritable competitor, insisting that Garuda Indonesia is a full-service carrier and “we’re not competing with the LCCs in the region”. Besides, the domestic market of 240 million people is large enough to admit more competition.

For the budget market, which looks set to grow with liberalization, Garuda Indonesia has its own budget subsidiary Citilink to compete with the like of Lion Air, AirAsia, Tigerair and Jetstar. The carrier has an ambitious growth plan to support a projected 19 million passengers by 2015, increase its fleet by another 75 planes to its current 26 by 2017, and operate beyond Indonesia to destinations in Southeast Asia in 2014 ahead of Asean Open Skies.

Garuda Indonesia will not be working alone, as it has decided to join the SkyTeam alliance, and the agreement will be officially formalized in March 2014. Is it any wonder why it has not opted to join Star Alliance of which SIA is a member or OneWorld of which Cathay Pacific is a member? It indicates the carrier’s serious intent to up the ante in competition with its regional rivals. It should be interesting to see how these other airlines react to Asean’s rising star.

You can read the full text of my interview with Mr Emirsyah Satar at http://www.aspireaviation.com.

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