Garuda's European Route Plans on Hold?

(10/18/2008)

The CEO of Garuda Indonesia has hinted to Bisnis Indonesia that his airline's plans to rebuild its truncated international route system may be postponed by the current world-wide economic upheaval and its resulting fallout effect on international aviation.

Emirsyah Satar said a final decision on future route expansion would only be taken after the state-owned airline finishes evaluating the extent of the current economic crisis. Previously announced plans called for Garuda to open services to Madras, India this year followed by the resuscitation of their routes to Amsterdam in 2010.

Emirsyah confessed that the current economic crisis is having a major impact on the cost of leasing aircraft due to liquidity problems among financial institutions.

Garuda's currently flies to a number of foreign ports-of-call including Japan, South Korea, the Middle East, China, and Australia utilizing Airbus 330, Boeing 747 and Boeing 737-800NG equipment.

And, while the world-wide economic downturn may dampen Garuda’s appetite for international expansion, Emirsyah says plans for developing the domestic market remain on track. Garuda's CEO explained: "While the international market remains problematic, it's a proven fact that the domestic market continues to expand. Also, because Indonesia is an island nation the people will always require flight services."

Emirsyah told the press that he will monitor the domestic market closely for any signs that the economic crisis is widening and somehow affecting the domestic air market. Internationally, he believes the current international downturn will last for one to three years.

Garuda has already confirmed orders for ten Boeing 737-300ER aircraft at a value of US$2.3 billion, intending to use these planes for flights to Europe and the U.S.. Scheduled for delivery in 2010, it remains to be seen if liquidity problems from Garuda's leasing partners will stymie plans to bring these new aircraft on line.