Garuda's new captains bold move<\/p>\n
The government's decision to head the new management and
\nsupervisory boards of Garuda Indonesia with experienced financial
\nmanagers is the right business strategy. Good management is
\nespecially needed in the airline, in view of the increasingly
\nfierce competition in the industry and the heavy burden Garuda
\nhas of servicing its US$838 million debts.<\/p>\n
At a time when air travelers are being offered more choice at
\nbetter prices and a slew of low-cost carriers are attacking
\nnetwork carriers in domestic and regional markets, Garuda needs
\nto restructure its costs and improve its overall operating
\nefficiency to remain competitive.<\/p>\n
In this context, the appointment of Emirsyah Satar, currently
\ndeputy president of Bank Danamon, as the new chief executive
\nofficer, and Abdulgani as Garuda president commissioner are
\nsmart moves.<\/p>\n
Both Satar and Abdulgani are not new to Garuda. They were, in
\nfact, the core members of the management team that saved the
\nairline from technical bankruptcy in 1999. Abdulgani, an
\nexperienced banker who sat on the financial flight deck until
\nMay, 2002, was assisted by Satar as the financial director.<\/p>\n
At that time, they were praised for moving quickly to
\nreschedule and restructure Garuda's mountain of foreign debts.
\nThey also improved employee morale and focused on the basics: On-
\ntime performance, efficiency and the bottom line.<\/p>\n
Although Garuda's financial problems are no longer as severe
\nas they were at the height of the economic crisis, its challenges
\nare greater, as an increasing number of domestic and regional
\nbudget carriers have been eroding its market share.<\/p>\n
Developed on a business model that capitalizes on a single-
\nstandard fleet of planes, fast turn-arounds, and most importantly
\na no-frills service with enticingly low fares, these budget
\nairlines have increasingly gained passenger confidence and
\nloyalty at the expense of Garuda, which now has to derive most of
\nits income from its domestic services.<\/p>\n
Operating a no-frills airline is certainly in a different ball
\npark from Garuda's position as a national flag carrier, but
\ngaining a cost advantage is now key for all players in the
\nindustry, who essentially depend on the same technology --
\naircraft.<\/p>\n
Garuda, therefore, must improve its numerous operations such
\nas selling seats over the internet, making aircraft fly more
\nhours each day and further improving passenger convenience by
\nincreasing safety and on-time performance, expediting ticket-
\nbuying and check-in processes and modernizing information
\ntechnology to enable 24-hour communication links with customers.<\/p>\n
In an industry that is technology and capital intensive and
\nwhere the fixed costs -- jets, fuel and ground support facilities
\n-- are high, in a market where the products -- passenger seats --
\nare similar, and the technology is generally a choice between
\nBoeing and Airbus, competitive power is derived from a business
\ncost structure.<\/p>\n
It is precisely in this area that the new chief executive-
\nfinancial director and the new chief supervisor, have high
\ntechnical competence and long experience.<\/p>\n
Efficient cost structures create a competitive advantage in
\npricing, route networks and add value in the form of ground and
\nin-flight services to generate total convenience and comfort for
\npassengers.<\/p>\n
Passenger comfort at a good price leads to increased patronage
\nand this is key to a airplane's load factor, which is in turn is
\nvital to the solvency of all airline companies.<\/p>\n
Passenger seats -- their main product -- in a sense are a
\nhighly perishable commodity. When a plane takes off with empty
\nseats, the product is in effect spoiled. It is all or nothing for
\nairlines who either make money off seats or get nothing -- the
\nthe high fixed costs make the marginal cost of adding passengers
\non a partially filled flight almost negligible.<\/p>\n
But the new management would be well advised to realize that
\nunlike other domestic airlines, which can zero in on the bottom
\nline, Garuda, as a national flag carrier that operates
\ninternational routes, also serves as an introduction to Indonesia
\nand plays a vital role in promoting the country's tourism.<\/p>\n
------<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/garudas-new-captains-bold-move-1447899208", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }