Summary
- The Indonesian government proposes merging Garuda Indonesia, Citilink, and Pelita Air to reduce costs and streamline operations.
- The merger would result in one carrier for all, aiming to reduce operating costs, as seen in the previous coalition of state port operators.
- While still in the discussion stage, the merger aims to improve the business ecosystem and connectivity in Indonesia, home to a large population spread across many islands.
The Indonesian Government has released a proposal to merge three state-owned carriers to cut 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).
Airlines are now studying their operations and how these could be folded into the merged operations. The idea is that one carrier for all will reduce costs, as seen when the country merged its four state port operators, Pelindo, resulting in a reduction of operating costs by 50%.
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No conclusion yet
While parties have stressed that this is currently just a proposal, Garuda Indonesia President Director Irfan Setiaputra weighed in and released this comment, as reported by fl360aero:
"The merger initiative is still in the discussion stage and has not yet concluded. Because everything is being analyzed and studied carefully."
Improvement to the business ecosystem would be the ultimate result while improving connectivity to a nation with a population of 273 million spread across 6,000 inhabited of Indonesia's 18,000 islands, including Java, the most populated island in the world and home to 145 million people.
A more robust carrier for Indonesia
With the ambition to build an even stronger airline for Indonesia, the three airlines currently demand a third of the domestic market. If the merge were to proceed, the new carrier would have a fleet of 550 aircraft, with a target of 750. State-owned enterprises minister Thorir elaborated on the need for its state-owned enterprises to reduce costs:
“SOEs need to keep bringing down costs. Pelindo has been merged from four companies into one. We are also pushing for Pelita Air, Citilink, and Garuda Indonesia to do the same 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 loss of $76.5 million this year.
Citilink President Director Dewa Kadek Rai stated to the Jakarta Post that if the merge were to proceed, he would expect to see it happen before the end of the year.
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Who is 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 another ATR72 parked and is not currently in operation.
Photo: Kwok Ho Eddie Wong via Flickr Garuda Indonesia
- IATA/ICAO Code:
- GA/GIA
- Airline Type:
- Full Service Carrier
- Hub(s):
- Jakarta Soekarno-Hatta International
- Year Founded:
- 1949
- Alliance:
- SkyTeam
- CEO:
- Irfan Setiaputra
- Country:
- Indonesia
