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Garuda, Citilink will add 65 planes in a bid to tame soaring ticket prices
The additional planes will bring the total fleet of both Garuda and Citilink to 126 units, double the amount they currently have.
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Touching down: A Garuda Indonesia Airbus A330 lands at Sultan Iskandar Muda International Airport in Blang Bintang, Special Region of Aceh, on July 13. (AFP/Chaideer Mahyuddin)
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ational-flag-carrier Garuda Indonesia and its low-cost carrier-subsidiary Citilink will add 65 aircrafts to their fleet by the end of this year, allowing both to help tame the nation’s soaring ticket prices.
The additional planes will bring the total fleet of both Garuda and Citilink to 126 units, double the amount they currently have.
This fleet expansion is made possible, following the upcoming state-capital injection (PMN) worth Rp 7.5 trillion (US$504.9 million) to be disbursed this third quarter.
“We hope this balance could help in correcting ticket fare. We made sure that the lease cost of new aircrafts would match the market price, not like the previous that led to bribery in Garuda,” State-Owned Enterprises Minister Erick Thohir told reporters on Wednesday.
Read also: Garuda still faces repayment risks, possible lawsuits: Experts
Indonesia was in urgent need of fleet expansion, following President Joko “Jokowi” Widodo’s Aug. 18 address to his aides that airlines should increase their flight frequencies to cool soaring ticket fare.
One way of doing it was by pushing Garuda to quickly recover its fleet, which had seen a steep drop to around 30 planes after recently entering a debt-restructuring process, after operating around 140 aircrafts in 2018.
Both Garuda and Citilink contribute to more than 43 percent of the country’s passenger-airline market shares in 2021, followed by Lion Air Group -- which comprises Lion Air, Batik Air and Wings Air -- at more than 27 percent of market shares, implying a significant role in the domestic-airlines market.
However, the move to expand Garuda’s fleet had been stalled by months, as the state-capital injection needed to add more aircrafts had yet to be disbursed.
Initially, Garuda planned to acquire shareholders’ approval to receive the injection by conducting a rights issue during an extraordinary shareholders meeting in Aug. 12, but it got postponed to Sept. 20, which also pushed the state-injection schedule to the third quarter.
Garuda Indonesia CEO Irfan Setiaputra said on Aug. 12 that the state-owned carrier was required to prepare its financial statement from the first half of this year before issuing bonds, but he gave his assurance that it would not derail its fleet-expansion plan.
