Garuda, MAS ink code-share pact

Fitri Wulandari, The Jakarta Post, Kuala Lumpur

Garuda Indonesia Airways and Malaysian Airlines (MAS) have inked a memorandum of understanding (MOU) to expand their cooperation in a bid to recover their operations amid a weakening market in the air traffic industry.

The MOU was signed last Thursday, as both airlines are still struggling to weather the impact of the Sept. 11 terrorist attack, the Oct. 12 Bali bombing, the recent war in Iraq and the outbreak of Severe Acute Respiratory Syndrome (SARS).

Under the MOU, the airlines agreed to expand their previous code-share agreement into "a third country code share agreement", including flights to Australia, Germany and the United Kingdom. The previous code-share agreement of both airlines only covered flights from Kuala Lumpur to Jakarta, Surabaya, Denpasar and Medan, and vice versa.

A code-share agreement is a cooperation between two or more airlines that allows one airline to market the service of other airlines.

The MOU was signed by MAS senior general manager of sales, distribution and marketing Dato' Ahmad Fuaad Dahlan and Garuda commercial director Bachrul Hakim.

Bachrul said the MOU was significant in light of weak market conditions.

"With the situation we are facing together, Garuda and MAS made the cooperation into a more concrete business strategy by concentrating on the European, Southeast Asian and Australian markets," he remarked.

Starting next month, MAS and Garuda will jointly operate the following routes: Kuala Lumpur-London, six times a week; Kuala Lumpur-Frankfurt, seven times a week; and Denpasar-Darwin, two times a week.

Garuda has the right to sell 60 seats per flight on MAS flights from Kuala Lumpur to London and to Frankfurt, while MAS can sell 35 seats per flight on Garuda flights from Denpasar to Darwin.

Bachrul said Garuda hoped the code-share agreement would help recover its European market. Garuda was forced to suspend flights to Europe early this year as the number of passengers declined in the aftermath of the Bali bombing and the outbreak of SARS.

Garuda has recently revised downward its net profit target for this year to between Rp 150 billion to Rp 170 billion from Rp 520 billion.

"The European market is very important for us. The difficult condition we are now experiencing financially is partly caused by the lower number of European passengers," Bachrul said.

He added that the agreement will be expanded in future to cover France, Italy and Switzerland.

Dato' Ahmad said that with the expanded code-share agreement, MAS hoped to bring more than 1,500 passengers from London and Frankfurt, as well as some 500 passengers from Darwin, within the first three months. Meanwhile, Garuda hoped to carry 60,000 passengers from London and Frankfurt annually.

Both airlines have also agreed to expand their flight services between Indonesia and Malaysia.

In July, MAS will commence flights from Kinabalu and Kuching to Balikpapan, East Kalimantan, while Garuda is to open a Surabaya-Kuala Lumpur route.

Like Garuda, MAS was not spared the impact of SARS, and its load factor plunged to 50 percent in May, forcing the airline to temporarily reduce its flights to SARS-affected areas.

However, Dato' Ahmad said MAS had been seeing some signs of recovery, as its load factor was now edging the 60 percent mark. Prior to the SARS outbreak, MAS had a load factor of 75 percent.

Aside from the agreement with MAS, Garuda also has code-share agreements with China Southern Airline, China Airline, Qatar Airways, Korean Air, Philippine Airline and Silk Air.