Posted on 14 June 2010.
Five years ago, Garuda Indonesia was losing millions, and its nightmarish safety record later saw it banned from flying to European Union countries. Last week, however, the rejuvenated carrier marks a return to Europe, and is showing a healthy bank balance too. Aviation Correspondent KARAMJIT KAUR talks to the man credited with engineering the turnaround, Emirsyah Satar.
IF YOU had approached anyone who knew anything about the aviation industry in 2005 and asked them to compare Singapore Airlines and Garuda, you would have received an incredulous stare.
Back then, the Indonesian carrier was a disaster in more ways than one. It lost US$76 million (S$106 million) that year, and worse, had an appalling safety record: Four crashes in the 10 years to 2002.
These days, things could not be more different. At Changi Airport, its premium travellers are whisked through JetQuay, a luxury terminal with its own dedicated check-in and immigration services, among other lounge facilities. From there, it is straight to the boarding gate on a buggy.
More people are flying by it too – average loads are well above 70 per cent – and the airline is turning a tidy profit.
Its chief executive is so confident of its progress that he is gunning to be mentioned in the same breath as SIA in a few years’ time. And that’s no joke.
In a recent interview at the airline’s brand new headquarters near Jakarta’s Soekarno-Hatta International Airport, the man widely credited with masterminding the airline’s rise from the ashes manages to look both slightly bashful and proud at the same time.
Mr Emirsyah Satar, 51, is now five years into his second tour of duty with Garuda.
He served as its chief financial officer from 1998 to 2003, then left for the financial sector, just as the airline was beginning its short, sharp descent into chaos.
By the time he was asked to come on board again, this time as chief executive, Garuda was staggering under a debt of about US$900 million. Its dismal safety record, ageing fleet and lousy service scared away many travellers.
Understandably, then, Mr Satar, who holds an accounting degree from the University of Indonesia and did his post-graduate studies in Paris, was less than enthralled about re-entry.
With a chuckle, he says: ‘Initially, when I was asked by the minister (of transport) to take up the job, I kind of politely refused. But the minister insisted… well, politely also.’
Once he stepped back into Garuda’s offices, about an hour’s drive from the city, however, Mr Satar could have been forgiven for wishing he had never signed on the dotted line.
The problems he inherited included low staff morale and productivity, operational problems, and, of course, a sea of red ink.
But he immediately put his finger on the problem: Garuda was being run as a transport business.
‘We are not in the transport business. We are in the travel service business. It is not just about taking people from one city to another, but the whole process that matters, from the beginning, when a customer books a ticket, until he gets to the destination,’ he said.
Operationally, the lapses were many, Mr Satar said: ‘Our planes were always late, our product and service sub-standard, and there was no motivation among crew, marketing, and other staff.’
Given that there were no rewards for good work, or punishment for bad, and no system of checks and balances then, it was hardly a surprising state of affairs.
The first thing Mr Satar did was to raise the level of staff professionalism.
He put in place a huge training programme to build a culture of service and meritocracy.
But he ran into a brick wall initially. In a laissez-faire environment, many resented the new push from the top.
Several left, others were booted out, and by the time the blood-letting was done, Garuda’s staff size had shrunk to 5,200, from 6,200.
Not that Mr Satar minded losing so many people. ‘It is all right if 20 per cent of the staff do not support what you are doing, as long as the majority, 80 per cent, do,’ he shrugs.
The next phase was kicking off a major hardware overhaul. Today, over a third of Garuda’s 70 planes are under five years old. By 2014, total fleet size will grow to 116 planes.
The new aircraft are fitted with personal entertainment screens offering audio- and video-on-demand facilities for all passengers.
With the building blocks of new products and a higher level of service in place, Garuda went about the task of wooing those who had turned their backs on the airline in its darkest days, with advertising and marketing campaigns.
As word got around that Garuda seemed to have turned a corner, travellers began coming back, and slowly, the tide of red ink receded.
The airline made a small but significant US$6.6 million profit in 2007, growing this to US$65.2 million the year after, and US$110 million last year, even as the global economic crisis sent other carriers tail-spinning into the loss column.
With better, newer equipment, the safety issue was also addressed, and last year, Garuda was taken off the European Union blacklist of unsafe carriers.
The airline’s achievements have not gone unnoticed. A week ago, it was named ‘World’s Most Improved Airline’ by London-based consultancy Skytrax at an industry event in Germany.
In December last year, Skytrax, which also ranks carriers based on traveller feedback, upgraded Garuda from a three- to a four-star airline, putting it on par with the likes of Emirates, British Airways and Thai Airways.
Mr Satar is not stopping there.
He now wants to stand on the same pedestal occupied by SIA.
‘SIA, Cathay Pacific, ANA (All Nippon Airways) – these are all strong airlines… of course, our ambition is to be a five-star airline too. I think we will take three to five years to get there, and I’m being very conservative here.’
Emirsyah Satar, the Mastermind
The airline chief then ticks off the milestones on that march.
On Tuesday, Garuda’s maiden Jakarta-Dubai-Amsterdam service takes off, marking its return to the European market, which it left six years ago because operations were unprofitable.
Flights to Frankfurt, London, Paris, and Rome or Milan will follow – once Mr Satar buys enough aircraft and hires more pilots.
His future plans also include growing Garuda’s cargo business and doubling its current pool of 3,000 aircraft engineers by 2014, both for the airline’s own needs and to cash in on the local aircraft maintenance and repair market, which is worth an estimated US$750 million a year.
It sounds like a Cinderella story. But Mr Satar has a big regret.
‘I was late in the IPO (initial public offering), I must admit. I said I would do it in 2009 but due to the financial crisis, we could not proceed.’
But, he adds, a plan to list in the third quarter of this year, is still in place.
He is then reminded that this year marks the fifth since his return, and matches his previous stint with the airline. Is a return to banking on the cards?
Mr Satar is coy, but his answer suggests he may be thinking about it. ‘I would like to float this company first, at least achieve the milestone… But one thing is for sure. Banking is not a 24-hour job, the airline business is.’
Picking up his BlackBerry, he says somewhat pensively: ‘I give everybody one of these. All my vice-presidents, they all have it. We are always on 24-hour alert.’
The Straits Times
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