Summary
- The Indonesian government proposes merging Garuda Indonesia, Citilink, and Pelita Air to scale back costs and streamline operations.
- The merger would lead to one carrier for all, aiming to scale back operating costs, as seen within the previous coalition of state port operators.
- While still within the discussion stage, the merger goals to enhance the business ecosystem and connectivity in Indonesia, home to a big population spread across many islands.
The Indonesian Government has released a proposal to merge three state-owned carriers to chop costs and streamline operations, Indonesia’s Minister for State-Owned Enterprises (SOEs) Erick Thohir announced over the weekend.
Should the merger proceed, the flag carrier Garuda Indonesia would merge with its low-cost subsidiary Citilink and Pelita Air, the latter being the airline division of Pertamina (a state-owned oil giant).
Photo: Garuda Indonesia
Airlines are actually studying their operations and the way these could possibly be folded into the merged operations. The concept one carrier for all will reduce costs, as seen when the country merged its 4 state port operators, Pelindo, resulted in a discount of operating costs by 50%.
No conclusion yet
While parties have stressed that that is currently only a proposal, Garuda Indonesia President Director Irfan Setiaputra weighed in and released this comment, as reported by fl360aero:
“The merger initiative remains to be within the discussion stage and has not yet concluded. Because every part is being analyzed and studied rigorously.”
Photo: axell.rf / Shutterstock
Improvement to the business ecosystem could be the final word result, while improving connectivity to the nation, in a rustic with a population of 273 million, spread across 6,000 inhabited of Indonesia’s 18,000 islands, including Java, essentially the most populated island on this planet, home to 145 million people alone.
A more robust carrier for Indonesia
With the ambition to construct an excellent stronger airline for Indonesia, the three airlines currently demand a 3rd of the domestic market. If the merge were to proceed, the brand new carrier would have a fleet of 550 aircraft, with a goal of 750. State-owned enterprises minister Thorir elaborated on the necessity for its state-owned enterprises to scale back costs:
“SOEs must keep bringing down costs. Pelindo has been merged from 4 firms into one. We’re also pushing for Pelita Air, Citilink, and Garuda Indonesia to do the identical to bring down costs as well.”
With Garuda needing creditors’ approval in 2022 to restructure the airline, including around $9 billion in liabilities, the national carrier reported a lack of $76.5 million this 12 months.
Citilink President Director Dewa Kadek Rai stated to the Jakarta Post that if the merge were to proceed, he would expect to see it occur before the tip of the 12 months.
Photo: KeleX Pictures / Shutterstock
Who’s Pelita Air
While Garuda Indonesia and Citilink are more well-known, the airline division of oil giant Pertamina is home to a modest 11 aircraft from its home base at Jakarta’s Soekarno Hatta International Airport (CGK). The lineup of aircraft includes seven Airbus A320-200s, one each of the ATR 72, ATR 42, and Fokker 100. It also has one other ATR72 parked and will not be currently in operation.