Arif Wibowo, Garuda’s new president director and chief executive spoke to The Jakarta Globe on Jan. 16, 2014 (BeritaSatu Photo/Utan)
Arif Wibowo: LCC Rules Won’t Ground Garuda, Citilink
BY :TABITA DIELA
JANUARY 19, 2015
Jakarta. The tougher regulatory environment created in the aftermath of last year’s crash of AirAsia Flight QZ8501 is not expected to hamper the growth in passenger volumes at national flag carrier Garuda Indonesia and its low-cost carrier unit, the airline’s new chief said.
Garuda aims to achieve a 20 percent increase in passenger volumes to 36 million customers, Arif Wibowo, Garuda’s new president director and chief executive, told the Jakarta Globe on Friday.
Of this figure, 25 million is expected to come from Garuda and the remaining from its low-cost unit Citilink.
Last year the airline flew 30 million air travelers, of which 21.5 million on Garuda and the remaining 8.5 million on Citilink.
Analysts have voiced concern over the industry’s prospects after Transport Minister Ignasius Jonan cracked down on the sales of discounted airfares in a knee-jerk response to the AirAsia crash.
But Arif defended the move, saying the regulation would gave airlines “protection” against “predatory pricing” practices from rivals who sought to monopolize the already tight market.
While stopping short of approving the policy, the new chief executive previously pointed out that the cost of flight tickets had nothing to do with air safety.
Indonesia has a system that prohibits airlines from charging less than 30 percent of the set ceiling price of a ticket.
But the government has routinely given exemptions for low-cost carriers to sell airfares well below this level. Not long after the doomed AirAsia flight plummeted into the Java Sea, Jonan spearheaded a U-turn that put a halt to these exceptions.
The ministry instead raised the floor to 40 percent of the ceiling, which means low-cost carriers will have a much smaller range of fare offerings.
If the ceiling price on a particular route is $100, for example, the lowest fare airlines can charge is now $40.
Though Citilink falls under the category of a low-cost carrier, the unit prides itself on maintaining an image that is not far from that of Garuda, according to Arif “Citilink is a premium low-cost carrier,” he said, adding that the airline has all the ingredients to distinguish itself from other low-cost carriers: a reliable flight schedule, new planes and safety standards similar to that of Garuda.
In addressing the recent cancellations of some of Citilink’s routes, both new and old, Arif assures the unit is in no way trimming its operations.
“We are not entirely cutting the routes, but we are restructuring its composition, especially in middle-range market,” Arif said, referring to medium-haul flights that last between three and six hours.
Arif called the strategy a “quick-win” solution, allowing the company to “recover quickly and grab the market.”
Before he took over as chief executive from Emirsyah Satar in December, Arif served as Citilink president director from 2012.
Garuda Indonesia and Citilink operate up to 610 flights per day combined, the airline’s December data shows. Arif expects to see the figure rise by 12 percent — thanks to the arrival of new aircraft. Garuda will add 20 new planes in 2015 to its existing 132 planes in its fleet, which the bulk is made of Boeing 737s and Airbus A330s.