Garuda Indonesia

Singapore Airshow 2012: Pacific Royale launch to intensify full service competition in Indonesia

Competition in Indonesia is about to intensify further as Pacific Royale prepares to launch services next month with an initial fleet of two Fokker 50s and two A320s based in Surabaya and Batam. Pacific Royale is targeting Garuda and Indonesia’s other full service carriers with a low-density two-class product on its A320s that includes lightweight fibre optics-based in-flight entertainment (IFE) systems in both cabins. The carrier’s business plan envisions rapid growth including 20 to 25 A320s, which will form the backbone of Pacific Royale’s fleet, within three years.

Pacific Royale will launch with domestic services but regional international services, primarily from Indonesia’s second largest city of Surabaya, are planned as part of a second phase which is slated to begin by mid-2012. Medium to long-haul international services with A330s are also being considered as part of a third phase which could begin as early as late 2012. While Pacific Royale will have several routes from Jakarta, where it has established its headquarters, it will focus primarily on relatively underserved point-to-point markets which bypass the congested capital.

Singapore Airshow 2012: Garuda Indonesia, Citilink and Lion accelerate fleet expansion

Indonesia’s two largest airline groups, Garuda Indonesia and Lion Air, are further accelerating the expansion of their fleets as they look to capitalise on their leading positions in one of the world’s biggest emerging markets.

The two groups – which include Garuda budget carrier Citilink, Lion Air regional subsidiary Wings Air and soon Lion Air’s new full service unit Space Jet – are now committed to at least triple the size of their combined fleets from the current figure of about 180 aircraft.

Other Indonesian carriers, including Indonesia AirAsia, Batavia, Mandala and Sriwijaya, are also expected to rapidly grow their fleets as the total number of commercial aircraft operating in Indonesia could approach 1000 aircraft towards the end of the next decade.

Tiger places big bet on Indonesia with re-launch of Mandala

Tiger Airways is banking the booming Indonesian market can support another new carrier and absorb over the next 14 months at least 10 A320s from the struggling airline group’s surplus fleet. Singapore-based Tiger has not yet invested a penny into Mandala Airlines but has a lot at stake as the Indonesian carrier plans to resume services in April following a 15-month hiatus, using Tiger’s aircraft and business model. While it only had to pay a token one dollar for its 33% stake in Mandala, Tiger along with Mandala’s other new investors will be providing a loan to cover re-launch costs and will need to continue pumping in capital until the airline becomes profitable, a potentially challenging proposition given current market conditions in Indonesia.

The new Tiger-backed Mandala will compete against three powerful LCCs in the Indonesian market – Lion Air, Indonesia AirAsia and Garuda Indonesia budget unit Citilink. These carriers combined now operate about 100 aircraft and are all expanding at high double-digit rates. Mandala will also have to compete against Garuda’s fast-expanding mainline operation and three second tier Indonesian carriers – Batavia Air, Sriwijaya Air and Merpati Nusantara Airlines – which also currently operate a combined fleet of about 100 aircraft and offer low fares, although they are not generally considered to be LCCs.

Garuda posts 3Q profit and strong growth figures fuelled by robust Indonesian economy

Garuda Indonesia has returned to the black after a challenging 1H2011 and has a bullish outlook, particularly in the fast-growing Indonesian domestic market. Garuda aims to tap into the expected 14% to 16% annual growth in Indonesia’s domestic market by pursuing rapid expansion at its budget unit Citilink, which it expects will be profitable starting in 4Q2011, and establishing a new regional jet operation from 2H2012.

Garuda is now preparing to spin off the Citilink unit into a separate company in early 2012, which will enable the LCC to pursue faster growth. Citilink recently began operating its first Airbus A320 and aims to be operating 20 of the type by the end of next year. Garuda is also planning to soon place an order for 18 large regional jets, which will be used primarily to improve connections at secondary bases.

New Airline Leader report examines the Asian aviation revolution

A report in the latest edition of Airline Leader, CAPA’s monthly strategy journal for CEOs, provides a comprehensive analysis of the fast-growing Asian aviation market. The report identifies three unique innovations originating from the region: