Tue, 31 Oct 2000

Garuda strives to reopen precrisis global routes

By K. Basrie

SEOUL (JP): The reopening of national flag carrier Garuda Indonesia's Jakarta-Seoul route on Sunday marked the airline's strong commitment to bring back its international service to the precrisis level.

"The reopening of this route to Seoul will serve as a momentum for the airline to rebuild its international routes that it once operated," Garuda's director of business Bachrul Hakim said in a speech during a modest ceremony, a few minutes prior to the departure of Garuda's Jakarta-Seoul flight, at the boarding gate of Soekarno-Hatta International Airport in Jakarta.

According to Bachrul, the airlines would serve passengers heading for Seoul from Jakarta thrice a week, namely Sundays, Tuesdays and Thursdays. From South Korea, Garuda would fly every Monday, Wednesday and Friday.

"Hopefully, the flights would be increased to four times a week starting from December," he said.

Currently, Garuda is using its wide-bodied DC-10, which has a 242 seating capacity, to serve the route. "By April next year, we would use our Airbus A330-300 with a 286 seating capacity for this route," Bachrul explained.

Garuda closed some of its domestic routes and 17 international ones, including to Seoul, Honolulu, Los Angeles, Taipei, Paris, Rome, Zurich and Saigon in late 1997 due to the financial crisis.

"We picked Seoul as our first destination for our reopening flight program because we find the market promising," Bachrul told reporters who took part in the "maiden" flight, later in Seoul on Monday.

Garuda, he said, expected to resume its overseas flight operations soon to several promising destinations, such as Fukuoka, Beijing and Taiwan.

"But I don't think we can make it this year. It would probably be realized next year at the earliest due to the exchange rate problem and fuel cost," he told The Jakarta Post.

The company's international routes, he added, currently include those to Amsterdam, London, Frankfurt, Jeddah, Riyadh, Tokyo, Nagoya, Osaka, Bangkok, Singapore, Kuala Lumpur, Perth, Adelaide, Melbourne, Sydney, Brisbane, Darwin and Oakland.

Domestic flights

In the domestic front, amidst the stiff competition from newcomers, Garuda would focus on operating more flights to routes categorized as "fat" instead of expanding.

"We'll make no expansion in the near future but will focus on adding more flights to routes which already have a passenger load factor of 70 percent, such as Jakarta-Surabaya, Jakarta- Balikpapan, Jakarta-Padang and Jakarta-Yogyakarta," Bachrul said.

Like many airlines in Asia, Garuda has been badly hurt by the 1997 economic crisis when its passenger load factor plunged and its U.S. dollar-based debt ballooned with the sharp depreciation of the rupiah against the dollar.

The poor financial record of the national flag carrier was also due to its bad flight performances, poor service and intervention by former president Soeharto's families and cronies.

Garuda had to painfully restructure its debt (which reached US$1.8 billion in 1998), finances and operations to avoid bankruptcy.

So far, the airline still owes debts worth $1.2 billion to various domestic and international creditors, including $610 million to the European Credit Agency (ECA), $38 million to state-owned airport operators PT Angkasa Pura I and PT Angkasa Pura II, $9 million to the government and $460 million to various other parties.

In the first semester of this year, the airline booked Rp 300 billion in operating profits compared to Rp 405 billion in the whole of last year.

In July, Garuda's president Abdulgani predicted the firm would book $58 million in profits after taxes this year and $108 million of 2001.

"Now, it seems impossible," Bachrul said on Monday. "We might reach less than $50 million at the most."

Indonesian Ambassador to South Korea Abdul Ghani hailed the state firm's reopening of its services to Seoul, adding that the market was quite promising with some 13,500 Indonesian trainees currently working here.

"But it totally depends on Garuda whether it can improve its flight performance and services," the retired two-star military general said.

Garuda's reopening flight to Seoul on Sunday carried 139 passengers, eight of whom were regular passengers. The rest, including reporters, legislators, government officials, entertainers such as Ruth Sahanaya and dancers, were under the invitation of the airline.