Garuda may hive off Citilink, exec says
The Jakarta Post, Jakarta
National flag-carrier Garuda Indonesia says it plans to spin off its low-cost unit, Citilink, as a separate entity in September this year so as to allow it to better compete with the country’s budget airlines.
Garuda’s vice president in charge of Citilink, Joseph Saul, said in Jakarta on Thursday that the airline would soon submit its finalized proposals for the spin-off plan to the government.
Joseph said that if the plan proceeded as expected, Citilink would expand its fleet to 10 aircraft from four at present.
“We currently operate four Boeing 737-300s, each with a capacity of 148 passengers, to serve the 10 existing routes,” he told The Jakarta Post.
He said Citilink might lease Airbus planes to expand its fleet.
Citilink, which has only 2.4 percent of the domestic market, leases its aircraft from GECAS, the Singaporean branch of an American company.
Joseph said that Citilink would probably use the additional aircraft to increase its services from Jakarta to other cities in western Indonesia, such as Padang, Palembang, Pekanbaru and Banjarmasin.
“Western Indonesia is closer to our base in Jakarta. Plus, the market is bigger than in eastern Indonesia,” he said.
At present, Citilink serves 10 routes; Jakarta-Batam, Jakarta-Pontianak, Surabaya-Semarang, Surabaya-Balikpapan, Surabaya-Batam, Surabaya-Bandung, Batam-Medan, Batam-Pekanbaru, Batam-Bandung and Balikpapan-Tarakan. It carried about 700,000 passengers last year.
Joseph said that Citilink’s busiest routes were Jakarta-Batam and from Batam to other cities, which mostly served workers and local tourists going to Singapore and Malaysia through Batam. “It’s cheaper to go there via Batam,” he noted.
As part of its plan to reduce costs, Citilink would introduce electronic ticketing (e-ticketing) early next month, Joseph said. “By August 1, we hope to have fully introduced it,” he added.
Garuda Indonesia, which is wholly owned by the government, is currently suffering acute financial problems due to its massive debts and inefficiency. The cash-strapped airline is seeking financial aid worth about US$105 million to overcome with its financial problems.