Garuda to raise domestic fares
The Jakarta Post, Jakarta
National flag carrier PT Garuda Indonesia plans to increase its domestic airfares for the second time this year due to the rising cost of aviation fuels -- avigas and avtur.
"We will have to raise our fares again as aviation fuel prices are continuing to rise," Garuda President Director Emirsyah Satar said on Tuesday.
He said the cost of aviation fuel accounted for between 30 percent and 35 percent of Garuda's total operating costs. "We are now evaluating which routes will be affected by the fare increases," he said.
Last month, Garuda, which flies to 21 domestic and 23 international destinations, increased domestic ticket prices by an average of 10 percent, including fares on the Jakarta-Denpasar route.
Emirsyah also said that his company restructuring its routes by stopping flights to some destinations and increasing flight frequencies to other cities.
The planned fare increase is apparently aimed at reducing the company's likely operating loss for this year.
Garuda has reported a possible operating loss of between US$10 million and $20 million this year due to high aviation fuel prices.
Besides reducing the possible loss, the airline says it will also strive to increase revenue.
Emirsyah said that Garuda's new joint venture, Lufthansa Systems Indonesia, was expected to help increase its revenue by between approximately 3 percent and 5 percent.
The new venture -- established jointly by Garuda and Lufthansa Systems of Germany -- started up on Tuesday. It specializes in software development and providing high-quality data center services for regional customers. Applications focus on solutions for various distribution channels, customer loyalty programs, corporate revenue management solutions and integrated on-board processes.
The joint venture is 51 percent owned by Garuda and 49 percent by Lufthansa Systems. Lufthansa Systems is a wholly owned subsidiary of the Lufthansa Group, and provides information technology (IT) services to the airline and aviation industries worldwide.
Lufthansa Systems Chief Executive Officer Wolfgang F.W. Gohde told reporters that his company and Garuda would combine their efforts to develop the IT solutions market for the aviation industry in Southeast Asia.
"The solutions will not only give Garuda an increase in revenue of at least 3 percent, but also develop its national as well as regional markets," said Emirsyah.
He said the application of the IT solutions would also help Garuda roll out electronic ticketing (e-ticketing).
The International Air Transport Association (IATA) has ruled that the end of 2007 is the final deadline for airlines to have begun applying e-ticketing.
E-ticketing enables air carriers to reduce booking expenses by eliminating the need for printing and mailing paper documents and prevents any possibility of loosing critical documents. (001)