Garuda’s Cargo and Business Development director Muhammad Iqbal said with the three cargo planes, the airline aimed to increase its cargo capacity, amid the surging demand for freight-delivery services from e-commerce.

“Currently, Garuda has no specialized cargo aircraft and freight is still carried by passenger aircraft. Whereas today, the demand for cargo is very high especially with the huge e-commerce market, so the operation of cargo aircraft is a necessity for us,” Iqbal told the press on Wednesday.

With the current cargo capacity, Garuda can only accommodate freight in 600 flights every day from 60 airports. However, with the surging cargo demand, the carrier often needs to offload its cargo, meaning delivery services may be delayed, thus the three cargo planes can hopefully maximize the cargo service, Iqbal said.

He added that the three soon-to-be Garuda cargo planes were actually existing passenger planes in the Garuda fleet that will be converted into cargo planes. The planes are two ATR planes and a Boeing 737, which will operate on different routes.

“The first route for our cargo planes is Wamena-Jayapura, in Papua, which will be served by the two ATR planes. There will be five return flights daily between Wamena and Jayapura and they will load a wide range of goods, from rice, cement, e-commerce goods and many more,” Iqbal said, adding the cargo service was expected to start in December this year.

Meanwhile, the Boeing 737 plane is set to serve longer routes such as Jakarta-Makassar, South Sulawesi; and Jakarta-Jayapura. Garuda also plans to serve the international route Makassar-Hong Kong, with the cargo plane.

“This [international] route is to accommodate export commodities especially marine products and e-commerce [goods]. The marine products will be pooled in Makassar, and from Makassar they will be delivered to Hong Kong and on return, we will bring e-commerce goods from Hong Kong to Indonesia with our cargo plane,” he said.

Iqbal said Garuda also planned to build cargo hub located in Papua and Makassar, and also to increase the number of its cargo planes.

Garuda is aiming to increase its revenues by maximizing every possible source of income. The company posted US$116,857 million in losses in the first half of this year, down from the $281,923 million it recorded in the same period last year. The airline has set a high goal this year, hoping to earn $8.7 million in net profits and $4.9 billion in revenue.

The cargo business is a profitable one for Garuda, especially amid the boom in e-commerce. Garuda Indonesia Cargo recorded total revenues of $237 million in 2017, up from $219 million in 2016 and $187 million in 2015.

According to data from courier service and logistics company PT Tiki Jalur Nugraha Ekakurir (JNE), one of the biggest players in logistics with 20 million package deliveries on average annually, air cargo plays a significant role in the logistics business. Of total deliveries, 65 percent is by air, while 35 percent uses land and sea transportation.

Meanwhile, based on a PricewaterhouseCoopers (PwC) report, Indonesian courier and delivery service revenue has been growing for the past few years driven by e-commerce. The industry recorded 40 percent revenue growth in 2016. E-commerce alone contributed up to 25 percent of the total revenues for the industry, according to the PwC analysis.

“The rise of e-commerce has driven a tremendous growth in delivery services and has boosted their importance,” said Sharly Rungkat, PwC partner recently.

Previously, Garuda Indonesia’s commercial director Pikri Ilham Kurniansyah said Garuda would focus not only on maximizing profits from its regular flights but also maximizing its diversified business, including charter flights and the cargo business.

“Our strategy today is resources follow the money. We will make money in markets that are lucrative and profitable,” he said recently.

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