Garuda axes Melbourne, Perth flights – and Sydney could be next

Weighted down by US$6.5 billion in debt, Garuda is slashing routes and downsizing its fleet.

By David Flynn, June 23 2021
Garuda axes Melbourne, Perth flights – and Sydney could be next

Garuda Indonesia could withdraw all flights to Australia as the struggling airline 'shrinks to survive' following a US$2.5 billion loss.

The Indonesia flag-carrier has confirmed it will remove Melbourne and Perth from its international network and the Sydney-Jakarta route is also under evaluation, says Garuda CEO Irfan Setiaputra.

"From next month we will stop Melbourne and Perth," Setiaputra told the Indonesian parliament this week, as he outlined measures the airline is taking ahead of a proposed restructure under a five-year business plan which could see its fleet by 50%, assets sold and staff retrenched.

"We are closely monitoring three routes: Jakarta-Amsterdam, Jakarta-Kuala Lumpur and Jakarta-Sydney,” he added.

Should Garuda completely pull out of the Australia market, Qantas' Sydney-Jakarta service would be the only direct flight between Australia and the Indonesian capital.

The SkyTeam member has already returned 20 aircraft to leasing firms and is considering cancelling orders for the new Airbus A330neo and halving its number of Boeing 777-300ER jets.

Dony Oskaria, the airline's deputy CEO, told a parliamentary committee that of Garuda's 142-strong fleet "we want to return 101 planes, but it will take time. The negotiation process is not easy."

Before the pandemic, Garuda had the highest ratio of aircraft rental cost to revenue among airlines globally: 90% of the group’s fleet was leased in 2019, making the airline vulnerable with many planes grounded.

Garuda's five-year business plan is based around a fleet of 66 planes

The Indonesian government is reportedly considering several options for Garuda, ranging from supporting its efforts to reboot in the face of US$6.5 billion debt, to seeing the 72- year old airline become a domestic-only carrier, to letting it collapse and be replaced by a new state-owned or private carrier.

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.