TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
What will happen to Sriwijaya as it separates from Garuda?
On its own: This picture taken on Sept
Change Size
O
n its own: This picture taken on Sept. 3 shows passengers boarding a Sriwijaya Air Boeing 737-800 aircraft at the airport in Padang, West Sumatra.(AFP/Adek Berry)
The Transportation Ministry will assess Sriwijaya Air to determine whether the airline has met safety, security, service and compliance standards in the wake of its decision to disengage from a partnership with national flag carrier Garuda Indonesia.
The ministry’s air transportation director general, Polana B. Pramesti, said in a statement on Sunday that the assessment was expected to avoid operational shortcomings so that Sriwijaya Air’s customers would still receive the best services during this tumultuous period.
“Sriwijaya Air and [its subsidiary] Nam Air is obligated to ensure airworthiness and operational safety for every airplane,” Polana said. Sriwijaya Air operates 11 airplanes and 32 routes.
The Air Transportation Directorate General will continue to supervise Sriwijaya Air and its subsidiary Nam Air by working together with flight inspectors representing the Aircraft Operations and Airworthiness Directorate and airport operators.
Sriwijaya Air has decided to part ways with Garuda Indonesia after a number of attempts to separate to no avail, by not extending its operational cooperation and management partnership, Sriwijaya Air’s lawyer and shareholder, Yusril Ihza Mahendra, said in a statement on Friday.
“Notification on the end of partnership has been sent to Garuda, Citilink and GMF [Garuda Maintenance Facility] today,” Yusril’s statement reads. “Sriwijaya has also sent an official announcement to the Transportation Ministry.”
Sriwijaya Air customers have vented their anger on social media after the air carrier canceled flights and left passengers stranded at airports as the company disengages from Garuda Indonesia. The airline could neither be contacted via phone nor social media direct messaging, customers complained, as they demanded clarity over their rights.
The airline issued an apology on Friday, reassuring passengers that it was fully committed to “fulfilling its obligations to all passengers as stipulated by the rules issued by the regulator, the Transportation Ministry”.
The Jakarta Post’s archives showed that the partnership was initially meant to save the financially struggling Sriwijaya Air, considering Garuda Indonesia’s extensive network and institutional outreach to Sriwijaya’s main creditors. However, along the way a power struggle between Sriwijaya Air and Garuda Indonesia executives resulted in an unhealthy relationship.
Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan has told the Development Finance Comptroller (BPKP) and an independent auditor to conduct an audit on Sriwijaya during its year-long cooperation with Garuda.
“The audit is under way. We expect it to be out within between one week and 10 days. Don’t work in the dark but use the audit results,” he said after hosting a meeting between representatives of Garuda Indonesia, Sriwijaya and the Transportation Ministry, trying to put an end to the dispute.
Garuda Indonesia’s vice president corporate secretary, Ikhsan Rosan, said on Thursday that Garuda and Sriwijaya relations would now be business-to-business.
“We are discussing and negotiating with Sriwijaya shareholders regarding the settlement of Sriwijaya's obligations and debts to state institutions such as: BNI, Pertamina, GMF, Gapura Angkasa and others. Garuda hopes Sriwijaya intends to fulfill its obligations with the relevant institutions,” said Ikhsan.
Sriwijaya returned Garuda staff that had been transferred to Sriwijaya’s office.
When Sriwijaya and Garuda began their operation cooperation in November 2018, hope was high. Sriwijaya was hundreds of millions of dollars in debt. The partnership was marked by the signing of agreement between Garuda’s low-cost subsidiary, Citilink Indonesia, and Sriwijaya Air Group.
The initial goal was to recover state assets, as Sriwijaya owed hundreds of millions of dollars to several state-owned enterprises, including US$118 million to Garuda Indonesia and $52 million to Garuda’s aircraft maintenance company, GMF AeroAsia, as of June 2019.
Sriwijaya turned around a Rp 1.6 trillion ($113.85 million) loss it booked in 2018 to a profit in the first quarter of 2019.
However, Garuda’s representatives on Sriwijaya’s board of directors stepped down in September as rumors of an internal dispute arose. Garuda announced on Sept. 25 that it would remove its logos from all Sriwijaya aircraft on “differences in services standards”.
Afterward, a leaked internal letter dated Sept. 29 detailed director for quality, safety and security Toto Soebandoro’s plea for Sriwijaya to temporarily stop operations to solve its operational standard and safety issues, as the ministry would recommend, according to the letter.
The issues forced Sriwijaya to fly only 12 aircraft out of the 30 it owned. Garuda and Sriwijaya decided on Oct.1 to resume cooperation after being facilitated by the State-Owned Enterprises Ministry.
A few weeks after the partnership resumed, another dispute unfolded on Nov. 7. Sriwijaya was told to pay in cash only maintenance costs and other services it owed to Garuda Indonesia Group, including GMF AeroAsia, ground services providers Gapura Angkasa and Aerowisata, said Yusril.
“Sriwijaya rejected this unfair change of payment system and believes GA [Garuda Indonesia] deliberately tried to cripple Sriwijaya,” Yusril’s statement reads. “Because of the sudden instruction, there was chaos for most of Sriwijaya’s flights on Nov. 7, because of an abrupt stop to services by GA Group’s subsidiaries.”
Yusril said Sriwijaya had initially intended to settle a draft agreement on extending the cooperation with Garuda Indonesia Group on Thursday evening, as suggested by the Office of the Coordinating Maritime Affairs and Investment Minister.
However, due to deadlock in the formation of the board of directors during a meeting on Nov. 8, Sriwijaya’s shareholders decided to stop the management cooperation with Garuda Indonesia Group.
“From Sriwijaya's perspective, it feels that Garuda dominates way too much and intervenes in Sriwijaya’s operations. Instead of assisting Sriwijaya to improve its capabilities so it can pay off its debts, Sriwijaya feels the cooperation to be inefficient and burdensome,” Yusril said.
