Garuda Indonesia. If there is a story about a Phoenix rising from the ashes its the Garuda story – indeed their very name is that of a mythical epic bird that saves the say in the Sanskrit story of the Ramayana. Since their massive turnaround in 2014 the airline has been thriving, winning awards left and right, completely re positioning themselves as a premier Asian carrier with a now stellar safety record and in this writer’s mind surpassing their regional rival Malaysia Airlines by miles.
But, was this growth – and focus on the premium market – sustainable for an airline like Garuda with a home base with the demographics of Jakarta and a bulk passenger base that of an emerging economy such as Indonesia? The volume is there – Indonesia is home to more than 250 million people spread across 10,000 plus islands – the question now remains is the purchasing power there? From Garuda’s financial results since their 2014 reboot, it seems as though it might not be.
SkyTeam’s newest entrant and latest ‘5 Star Airline’ from Skytrax is struggling – struggling bad.
Yes, people love the airline. Skytrax ranks GA as the ‘most loved airline in the world’ with an overall satisfaction rating of over 85% in a survey that included over 450 airlines and took into account criteria such as crew service, WiFI availability, catering, ground service and hard product. That’s no mean feat, and I do genuinely believe that Garuda gives established regional rivals Singapore Airlines, Thai Airways and Cathay Pacific a real run for their money. Their attention to detail on their premium 777 and A330 flights is amazing and their 737 product is top notch in the region. But is it sustainable out of a hub like Jakarta?
That’s the question.
And I believe the answer is no, not right now at least.
GA as it stands is a 5 star airline service wise but a 2 star airline financially. Garuda posted losses of USD $63.2 million for the first half of the fiscal year without disclosing the main source of its negative earnings report.
Garuda is an invaluable member of SkyTeam in South East Asia – the airline has a massive network in the region and in Australia. They are also slowly rebuilding their European presence with the introduction of flights to Amsterdam and London. But something has to give when it comes to their financials – either they give up their ridiculously over the top First Class offering, lease out their 777-300 fleet to ease some of the over capacity they’re facing, or scale down their massive Business cabins on their A330 and B737 fleet. But month on month, year on year of these fiscal losses must be stemmed for Garuda to become an actual force in the region – otherwise we’re looking at MH par deux – top of the game now, bottom of the barrel not 5 years later.