Indonesia Plans Merger of Three State Airlines

According to reporting published by Simple Flying, Erick Thohir, Indonesia’s Minister for State-Owned Enterprises (SOEs) has announced that the Indonesian Government has released plans to merge three state-owned carriers to cut costs and streamline operations.

Should the merger proceed, the flag carrier Garuda Indonesia would merge with its low-cost subsidiary Citilink and Pelita Air, the latter being the airline division of Pertamina (a state-owned oil giant.)

Airlines are now studying their operations and how these could be folded into the merged operations. The idea that one carrier for all will reduce costs, as seen when the country merged its four state port operators, Pelindo, resulted in a reduction of operating costs by 50-percent, say Simple Flying.

While parties have stressed that this is currently just a proposal, Garuda Indonesia President Director Irfan Setiaputra weighed in and released this comment, as reported by fl360aero:

“The merger initiative is still in the discussion stage and has not yet concluded. Because everything is being analyzed and studied carefully.”

Improvement to the business ecosystem would be the ultimate result, while improving connectivity to the nation, in a country with a population of 273-million, spread across 6,000 inhabited islands of Indonesia’s 18,000 islands, including Java, the most populated island in the world, home to 145-million people alone, report Simple Flying.

With the ambition to build an even stronger airline for Indonesia, the three airlines currently demand a third of the domestic market. If the merge were to proceed, the new carrier would have a fleet of 550-aircraft, with a target of 750. Thorir elaborated on the need for its state-owned enterprises to reduce costs, saying that “SOEs need to keep bringing down costs. Pelindo has been merged from four companies into one. We are also pushing for Pelita Air, Citilink, and Garuda Indonesia to do the same to bring down costs as well.”

Simple Flying report that with Garuda needing creditors’ approval in 2022 to restructure the airline, including around USD 9-billion in liabilities, the national carrier reported a loss of USD 76.5-million this year.

Citilink President Director Dewa Kadek Rai stated to the Jakarta Post that if the merge were to proceed, he would expect to see it happen before the end of the year.

While Garuda Indonesia and Citilink are more well known, the airline division of oil giant Pertamina is home to a modest 11-aircraft from its home base at Jakarta’s Soekarno Hatta International Airport (CGK). The lineup of aircraft includes seven Airbus A320-200s, one each of the ATR 72, ATR 42, and Fokker 100. It also has another ATR72 parked and is not currently in operation.

Source: Simple Flying, Fl360AeroAirfleets

Photo by Aldrin Rachman Pradana on Unsplash

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