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Jakarta Post

Garuda closes routes, reduces flight frequencies in response to new airfare policy

  • News Desk

    The Jakarta Post

Jakarta   /   Thu, May 23, 2019   /   02:26 pm
Garuda closes routes, reduces flight frequencies in response to new airfare policy A Garuda Indonesia aircraft (Shutterstock.com/cesc_assawin)

Flag carrier Garuda Indonesia plans to close a number of routes and reduce the flight frequencies to less lucrative destinations to cut losses after the government lowered the price ceiling by 12 to 16 percent on the highest ticket prices for economic class tickets for domestic flights.

Garuda Indonesia commerce director Pikri Ilham Kurniansyah said recently that the fuel cost for flights to remote areas, which had low occupancy rates, was about 80 percent higher than flights to lucrative areas.

The airline has reportedly closed the Belitung-Singapore route and will also close the Jakarta-London route after the summer holiday. The company will also reduce the flight frequency of the Jakarta-Amsterdam route from six flights to only three.

Meanwhile, for domestic destinations, the airline will reduce the flight frequencies to Morotai in North Maluku, Maumere in East Nusa Tenggara and Bima in West Nusa Tenggara.

Pikri said the closures and reduction of flight frequencies was aimed at achieving the target stipulated in its 2019 budget and working plan.

He said the more routes Garuda had to less lucrative destinations, the higher the operational costs of the airline.

The company said that 59 percent of the company’s US$1.05 billion total business costs were allocated for operational costs, which totaled $618.99 million. The company spends $286.12 million for purchasing avtur and $267.73 million for renting aircraft.

“It is a difficult decision, but we have to take it so that we can achieve this year’s performance target,” Pikri said as reported by kontan.co.id.

This year, Garuda Indonesia targets to collect $5.81 million in revenue, or 33 percent year-on-year growth, and $13.88 million in net profit, or 176 percent yoy growth. (bbn)