Garuda strives to reopen precrisis global routes

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.