Good News From Indonesia

Flag carrier Garuda Indonesia is set to officially join international airline alliance SkyTeam in a bid to reach its target to become one of the top ten airlines in the world.

The carrier will meet delegates from SkyTeam partner airlines on Nov. 23 in Jakarta to sign an official agreement and discuss detailed practical matters.

Garuda president director Emirsyah Satar said Thursday that after officially joining the alliance, his carrier could fly passengers from the alliance’s partner airlines and vice versa, so the flight frequency of his carrier could be increased.

“It means that our passengers can fly anywhere with one ticket only,” he said as quoted by Gatra magazine, which was published Friday.

He said that joining SkyTeam was an effort from Garuda to provide traveling convenience and more choices for its passengers.

Currently, 13 airlines — Aerosoft, Aeromexico, AirEuropa, Air France, Alitalia, China Southern, Czeh Airlines, Delta Airlines, Kenya Airways, KLM, Korean Air, TAROM, and Vietnam Airlines — have joined the alliance. SkyTeam member-airlines travel to 841 destination cities in 162 countries with 16,409 flights per day.

To join the alliance, Garuda has to fulfill several requirements, such as having a dedicated terminal. The carrier must also fulfill 29 other criteria points covering aircraft numbers, punctuality and passenger-to-airport access.

The state airline has signed an MoU with state airport operator PT Angkasa Pura II, which manages the Soekarno-Hatta International Airport to improve the facilities at 2E and 2F terminals.

Garuda signed another agreement Thursday with state airport operator PT Angkasa Pura I to upgrade the quality of services Bali’s Ngurah Rai and Surabaya’s Juanda airports.

With Garuda Indonesia joining SkyTeam, it means that there is already international acknowledgements on the quality of Indonesia’s airlines.

In 2006, European Union (EU) banned all Indonesian airlines from flying to its member-countries due to safety reasons. In 2009, EU lifted the ban on four Indonesian airlines — Garuda Indonesia, Mandala, Premiair and Air Fast, while in 2010, two other airlines — Indonesia Air Asia and Metro Batavia — have also been allowed to fly to Europe.

Garuda resumed the Jakarta-Amsterdam flights on July 1 with a stopover in Dubai using Airbus A330-200. The airline plans to introduce direct flight services linking Jakarta and Amsterdam once it receives its Boeing 777-300ER aircraft.

Garuda received in January a four-star rating from UK-based Skytrax so that it was on par with airlines such as Air France and Emirates.

In October, it was revealed that a survey by the Centre for Asia Pacific Aviation (CAPA) has found Garuda the best carrier in terms of service quality in Southeast Asia.

The chairman of the Association of Indonesian Tours and Travel Agencies (Asita), Ben Sukma, said that joining an alliance such as SkyTeam would boost the popularity of an airline to an international level.

“In an airline alliance, each member can cooperate and promote each other. Garuda Indonesia will receive huge benefits from that,” he told The Jakarta Post on Friday.

However, he said that flight ease offered by the cooperation would not impact on tour and travel agencies.

Ben added that travel agencies would still prioritize lower prices over convenience and ease for their customers.

Source: JP/Rangga D. Fadillah

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It is really a fantastic turnaround for our national flag carrier, Garuda Indonesia, to have been ranked by an independent research center as the best carrier in terms of service quality in Southeast Asia, beating even one of the world’s best and largest carriers, Singapore Airlines.

Not only has its performance achieved an all-time historical record, Garuda excelled in the most important factor in the airline industry.

An airline is not simply a transportation company but, most importantly, a travel service business.

Hence, overall service quality such as passenger comfort, food, on-board and ground services and customer perception of the carrier — key indicators assessed by the Centre for Asia Pacific Aviation (CAPA) for its service quality ranking — is key to a successful airline.

Garuda Indonesia Airbus A330

Over the past five years, under the leadership of its CEO Emirsyah (Emir) Satar, Garuda has steadily made dramatic improvements, turning its negative cash slows into high profits, modernizing its fleet, improving on-time performance, increasing load factor and aircraft utilization rates.

Yet even more important is the overhaul he made of Garuda’s staff business and service mentality and the great improvement in its safety record, as validated by its International Air Transport Association Operational Safety Audit certification and the European Union lifting last year of its ban on Indonesia airline flights to Europe.

Emir has also been greatly successful in restructuring Garuda’s financial and operational restructuring, which will make it possible for the carrier to go public later this year.

True, several external factors such as its big domestic market and Indonesia’s excellent economic performance despite the 2008 global financial crisis and economic recession, have also contributed to Garuda’s financial performance. That is different from Singapore Airlines, Thai Airways and the Malaysia Airline System.

But even these positive factors would not mean much if Garuda had not sharply improved the quality of its service, its overall image and the market perception of its service reliability, because the competition in the domestic market has become much fiercer due to the emergence of many low-cost carriers.

Garuda’s cooperation with the government in providing immigration service on board flights from Amsterdam, Seoul and Japan shows how creative Emir has been in creating new services to improve the overall comfort of passengers.

Such service creativity not only contributes greatly to Garuda’s performance but also Indonesia’s tourism industry as a whole. (The Jakarta Globe)

Garuda came as something of a surprise, ranking better than any airline tallied thus far. There were repeated comments that the airline provides excellent value and exceeds some of its competition. “Better value than Jetstar”, being one example.

Garuda Indonesia's on-board meal

It was also clear, almost from the outset, that most passengers had low expectations and were pleasantly surprised by the reality. Garuda has had a rocky history of late and is just beginning to re-enter the European market.

Travellers were genuinely impressed by the “new” Garuda. These statements sum up the gist of many comments: “Overall Garuda is improving” and “Garuda has changed into a better airline”.

The carrier also operates a large domestic network and many of the comments were based on very short flights. Yet they did not disappoint: “Short 50 minutes flight … managed to deliver prompt and courteousservice.”

The friendliness and service-minded attitude of cabin staff received repeated mention.

The airline appears to be rebuilding itself on a firm foundation. It’s fleet is quite new and there is a sizeable order for more equipment. The challenge will come in maintaining its excellent start as it grows and becomes a more common inclusion in traveller itineraries.

The final ranking and total score:

1. Garuda Indonesia (8.48)

2. Bangkok Airways (8.4)

3. Singapore Airline (7.68)

4. Thai Airways (7.32)

5. Cathay Pacific (7.12)

6. Malaysia Airlines (7)

(CAPA website)

Source: The Jakarta Globe, CAPA website

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The opening of direct flight route from Indonesia to Europe recently following the lifting of travel ban on some of Indonesian airliners by the European Union is expected to boost the number of European tourist coming into Indonesia.

Over one million foreign tourists from the territory are expected to come into Indonesia this year, higher than the original target of 700,000, Minister of Culture and Tourism Jero Wacik has said recently.

Indonesian leading carrier of PT Garuda Indonesia has restarted inaugural flight to Schiphol airport in Amsterdam on June 1 after the removal of flight ban in July of 2009.

“So with the new line, I believe that the arrival rate will rise,” Wacik said.

According to him the direct route would attract people interested in visiting Indonesia.

“If there was no direct line to Indonesia, people are reluctant to visit our country because they prefer to travel to other countries which have direct flight,” he said.

The Indonesian government has increased the target of revenue from tourism sector this year to 7 billion U.S. dollars from the original target of 6.5 billion U.S. dollars, and promoted Indonesia in some countries.

The improved economy of the world has led to increased spending per tourist.

Garuda Indonesia has targeted to open more new routes in Europe, including to Frankfurt, London, Paris and Rome, President Director of the company Emirsyah Satar has said, which may attract more tourists coming into Indonesia.

The European Union imposed the restriction on 51 Indonesian airliners in July 2007 following the rampant air accidents that killed over 250 people.

(source)

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Commenting on the World’s Most Improved Airline Award won by Garuda Indonesia, Skytrax Chairman, Mr. Edward Plaisted said, “This was a very competitive category in the 2010 Awards, and our sincere congratulations go to Garuda Indonesia on their success. It is clear that a real process of transformation has become well progressed at Garuda Indonesia, and aside from new aircraft and new onboard products, it was improvements in onboard service that were most frequently commented upon by survey respondents.”

Mr. Agus Priyanto - EVP of Garuda Indonesia, collects the Award for the World's Most Improved Airlines

The runners-up in this Award category also received acclaim from Skytrax, with Hainan Airlines another airline where survey respondents specifically highlighted the standards of onboard service. Oman Air in 3rd place was commended for the product transformation that customers felt worthy of nomination.

Credit : Skytrax

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Boeing delivered Garuda Indonesia’s 75th Boeing jet, a Next-Generation 737-800 fitted with Blended Winglets, on April 18.

Garuda Indonesia, the Southeastern Asian nation’s state-owned flag carrier, operates a fleet composed primarily of Boeing 747s and 737s. The airline plans to add another 23 737-800s in 2010 , and will be operating 42 737-800s by year-end.

The airline has an aggressive fleet-expansion plan that is part of its ‘quantum leap’ transformation strategy. Garuda Indonesia plans grow its fleet from 67 to 116 airplanes by 2014, almost a doubling of the fleet within four years. The carrier says its 737-800 fleet will support Garuda Indonesia’s expansion plans as it adds new domestic routes and increases frequencies on regional services.

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Defying global business trends is not easy. It requires courage, planning and execution. Most of all it requires a belief in free markets and liberalization.

That several Indonesian airlines are bucking global trends, posting profits while the global aviation industry is sweating blood, is proof that the country’s decision to open up the aviation industry some years ago was the right one.

For years national carrier Garuda was posting heavy losses and requiring subsidies from the government. Its in-flight services were below industry standards and its aircraft dated. But now, Garuda has announced Rp 1 trillion ($107 million) in net profit, 34 percent higher than the previous year. The flag carrier is also currently using the latest aircraft and its safety standards are in line with industry standards.

Other carriers are also following suit. Lion Air, Mandala and Sriwijaya Air are reporting profits too, although they have not so far provided details and figures to support their claims.

As a result of the opening of the aviation sector, more Indonesians now fly. In an archipelagic country the size of Indonesia, the importance of air links cannot be overemphasized.

The sector here is one of the fastest growing in the world as a consequence. Air fares have come down significantly and consumers have more choice. This is a win-win situation for both parties.

For the aviation industry to keep growing, two important developments must take place. Safety standards must continue to be raised, with tighter maintenance controls.

Not only should the safety aspects of aviation be tightly regulated but those rules should also be firmly and comprehensively enforced. Nothing will bring the industry crashing down more quickly than a few air disasters.

Every airline should always strive to enhance the quality of its manpower and, whenever possible, that of its fleet.

The country has already seen the impact a string of air disasters can have on the industry. A blanket ban on Indonesian airlines flying in European airspace was put in place in 2007.

So far the ban has only been lifted on a handful of carriers, allowing them to fly to Europe once again. The ban failed to inflict serious direct losses, but it did manage to drag down Indonesia’s image as a safe destination to visit.

But air safety alone will not be able to improve Indonesia’s chances in competing with neighboring nations in drawing business and tourists. A host of other factors need to be seriously addressed, key among them is infrastructure.

New airports must be built and older ones expanded and modernized. They must be equipped with more up-to-date technology. The country should also make the most of a 2008 law that opened the management of airports in the country to the private sector.

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As part of its effort to implement ongoing service improvements, especially to facilitate more simple visa arrangements for tourists traveling to Indonesia, Garuda Indonesia – flag carrier of Indonesia – will introduce a new service “Immigration on Board”.

The trial of the service was carried out on Garuda Indonesia GA-881 flight which flying from Tokyo – Denpasar – Jakarta. “Immigration on Board” is a non queue and more simple immigration document process for foreign passenger during flight.

To enjoy the Immigration on Board service, foreign travelers are requested to purchase “Visa on Arrival’ vouchers available at Garuda Indonesia check-in counters . During flight, two immigration officers on board will conduct passport checks and issue “Visa on Arrival” and a special card that must be returned to ground immigration officers upon arrival before exiting the airport. Thanks to this new service, passengers will save time and enjoy hassle-free travel, without having to wait long queues at the immigration counters.

The Immigration on Board service is part of Garuda Indonesia’s ongoing efforts to provide innovative services as the airline continues to improve service quality towards its customers. The launching of Immigration on Board gives foreign travelers the freedom to bypass queues at the immigration counters and have a more pleasant travel experience in Indonesia. On the part of the airline, this new service is testimony of its commitment to further the national tourism industry.

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SKYTRAX Research today confirmed that Garuda Indonesia has been Certified as a world 4-Star Airline for the 2010 ranking period.

Commenting on the 4-Star Certification for Garuda Indonesia, Edward Plaisted (Skytrax CEO) said, “…this 4-Star Airline Certification is a coveted seal Quality Approval that an airline receives in recognition of its front-line Product and Service quality. Garuda Indonesia has undergone a major quality transformation and improvement during the past year, across both their product and front-line service standards. New aircraft with a high-end product are now joining their fleet, and the retrofitting of their A330-300 aircraft was the catalyst that really enabled us to upgrade their rating level to a 4-Star airline status.”

Garuda Indonesia is now one of just 27 airlines worldwide that currently meet the rigorous quality criteria which Skytrax set for this 4-Star airline ranking.

The official 4-Star airlines ranking is due recognition for those airlines providing a good standard of Product across all travel categories, combining with a good standard of Staff Service delivery.

The airline Star ranking assesses Quality levels across both the Onboard and Airport environments – for Garuda Indonesia the airport ranking reflects their home base of Soekarno-Hatta International Airport in Jakarta.

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THE EARLY 1960s are considered to have been the glory days of Garuda Indonesia Airlines, with a fleet of new Electras and the hotrod of the skies, the Convair 990A, taking the carrier to Hong Kong, Rome, Amsterdam, Frankfurt, Paris and even Canton (Guangzhou) via Phnom Penh. It was considered among the best airlines in the region. Fast-forward to 2009 and CEO Emirsyah Satar reflects on that era with a promise: “We will be one of the world’s best airlines by 2014 with a five-star Skytrax rating and maybe even an Air Transport World award.” With the backing of the government, which continues to own 100% of Garuda, he appears to have the airline on the flight path toward this goal. Profits are flowing, as are new aircraft, while the incident rate is trending downward.

Satar replaced Indra Setiawan in March 2005 and immediately implemented a business transformation program that contributed to a financial turnaround from a loss of $81 million in 2004 to a net profit of $67 million in 2008. Today the carrier serves 33 domestic and 26 international cities from its major hubs of Jakarta and the Bali capital of Denpasar and also uses Singapore as a hub from various Indonesian cities into north Asia.

In 2008 it operated some 1,350 domestic and 384 international flights per week. With approximately 30% of its traffic being holiday-makers and honeymooners to the storied tropical paradise, Bali is a key component of its business. Ten international and four domestic routes are operated from Denpasar and it’s growing, with passenger numbers lifting 8.6% last year.

Garuda’s problems have been complex and many were beyond its control. For decades it has been the personal plaything of the government, rife with cronyism and nepotism. Recognizing that the carrier was not delivering but not admitting its significant role in that situation, the government deregulated Indonesia’s airline system in 2001 in an effort to stimulate improvements. Chaos ensued and the country’s infrastructure and regulatory oversight were overwhelmed. More recently, terrorist attacks in Bali have damaged the vital tourism trade, most notably in 2002 and 2005. In July, terrorists believed to be linked to Jemaah Islamiyah bombed two hotels in Jakarta.

Safety First
Satar, who is chairman of the Indonesian National Air Carriers Assn., warns that “it is critical for the nation to have a safe and reliable airline industry. That is why at INACA we are looking at ways to instill a safety culture across the industry.” That includes Garuda, which has had five fatal accidents in the past 25 years, according to Flight Safety Foundation’s Aviation Safety Network. It appears that the most recent, the March 7, 2007, runway overrun accident at Yogyakarta that killed 21, may have been a turning point for the airline.

The comprehensive crash report by the National Transport Safety Committee, while faulting the captain’s performance, was critical of Garuda for its lack of training and the country’s Directorate General of Civil Aviation for its lack of oversight (ATW, 5/09, p. 21). Disturbingly, the investigators found that at the time of the crash the regulator had carried out only one safety and security audit on the carrier since 1998 and had not shared the results with Garuda. Those findings reflected the cozy and entrenched legacy relationship between the airline and previous governments that Satar is determined to eradicate.

Fortunately, he has the ear of Indonesia’s no-nonsense president, Susilo Bambang Yudhoyono. The government finally has poured resources into its regulator and engaged the Australian Transport Safety Bureau and that country’s Civil Aviation Safety Authority to train staff and help with oversight.

To carry through change within the airline, Satar brought in safety expert George Snyder to oversee both pilot training and maintenance. Snyder, who led Korean Air’s remarkable operational turnaround from 2000, works with Garuda staff for two weeks of every month. Although it is still early in the process, the airline has seen a decline in reported incidents since a 2004 peak of 1.11 per 1,000 departures to just to 0.04 last year. It is on track to halve that in 2009.

Its reporting system actually may understate the airline’s progress because it records passenger disturbances as safety incidents. Satar explains that “there are no worldwide, generally accepted criteria for what level of incident constitutes a safety hazard. If we are being too broad in classifying ‘safety incidents,’ so be it. I would rather err on being overly cautious about this, and be as transparent as possible. This is part of the nonpunitive safety culture we are building at Garuda Indonesia that emphasizes transparency and openness.”

According to the CEO, Garuda has beefed up its pilot training to “internationally recognized aviation standards to address all conceivable emergency situations” and passed an IATA Operational Safety Audit, the only airline in Indonesia to do so, paving the way for it to be allowed back into Europe after the EU banned all Indonesian carriers two years ago following a spate of accidents.

Blue Financial Skies
In tandem with the renewed focus on safety, Garuda is in the midst of a financial turnaround. Satar has an extensive background in banking and finance, having begun his career as an auditor at PricewaterhouseCoopers in 1983. He held senior positions within Citigroup, PT Bank Indonesia and Niaga Finance Hong Kong before joining the airline in 1998 as executive VP-finance. He briefly returned to the financial sector in 2003 to become deputy CEO of Bank Danamon before rejoining Garuda two years later as president and CEO.

When he took the reins, he launched a far-reaching strategic plan that entered the turnaround phase in 2008 underpinned by its Main Corporate Program called Power 8, which reflects the eight major areas of operations, “not the Airbus program” of the same name. He says Garuda was able to book significant improvements in each of the three main target areas last year: Net income, service level and ontime performance.

Profit jumped to IDR669.47 billion ($66 million) in 2008 from IDR60.18 billion in 2007 as a 36.6% lift in operating revenues to IDR19.4 trillion outpaced a 30.3% rise in operating expenses to IDR18.21 trillion. The carrier was not immune to the global challenges, with fuel expenses climbing 52% to 41% of total operating costs while the rupiah depreciated 21% against the US dollar.

Offsetting those problems was a 6.1% growth in the country’s economy and a 13.2% hike in international tourist arrivals to 6.2 million. Other numbers were in positive territory as well. Passenger yield increased from 7.5 cents to 9.5 cents even though load factor slipped 1 point to 76.5% due to ASKs rising 11% to 20.1 billion while RPKs grew 9.7% to 15.39 billion.

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Even though I fly a couple of times a week — and should be sick of traveling by now — I’ve never lost my childhood fascination with airplanes and airlines. (I can still remember long-departed carriers such as MSA, BOAC and Pan Am.) So when I read that Garuda was undergoing a transformation, I became curious. Of course, the changes were taking place on many levels: new routes, new planes and a new image as seen in the moody and evocative TV ads by Dentsu Start, not to mention the more prosaic but intriguing ads on print. (You know, the photo of the fully reclining seats and the list of international destinations being served by the new wide-bodied, Airbus 330-200 planes.) Given that Garuda has been underwhelming for years, I was intrigued by the idea of a rejuvenated national carrier. Frankly, was it possible? Since I had to make a quick trip to Hong Kong to speak at the Foreign Correspondents’ Club, I decided to test the Indonesian flag carrier by booking a business class seat — just for good measure.

Since I had to make a quick trip to Hong Kong to speak at the Foreign Correspondents’ Club, I decided to test the Indonesian flag carrier by booking a business class seat — just for good measure.

The past few months have witnessed a major shift in the way I travel, and I suspect I’m not alone in this respect. Trading down has become a fact of life for most of us. Before the financial crisis, I used to be a certified full-fare paying, business-class passenger. I would sit at the front of the plane, nibbling on roasted peanuts and sipping my orange juice. Nowadays, I’m a low-cost carrier man. I book online, select my seat then order my nasi lemak or sandwich (or pandesal when I’m on the Philippines’ Cebu Pacific Airlines) before I fly. It’s a very different experience, sitting alongside squalling kids, overseas-based workers and a photography club from Bogor going on its annual trip.

I’ve also started noticing minute differences among the carriers. The food on Jetstar sucks. Mandala’s planes are amazing. Cebu Pacific’s schedule is weird. (Its Jakarta-Manila flights depart after midnight, arrive at dawn and leave you jet-lagged.) And Air Asia’s flight attendants appear to wear the tightest of uniforms.

Even the terminals they use are different, reflecting their more plebeian market. Landing at Kuala Lumpur’s low-cost carrier terminal is not unlike stopping at a cheery, if crowded, suburban mall on a Saturday afternoon, except that there are a lot of people sleeping everywhere. (I haven’t tried Jakarta’s Terminal 3, but it looks sleek from the outside.)

While the flights aren’t so rarified, most of the crew are incredibly friendly. There’s a real buzz when you step onto the planes and the youthful zeal is infectious. By way of comparison, the legacy carriers — Malaysia Airlines, Philippine Airlines and Garuda — are more restrained and at times, plain boring and listless.

Having said that, my Jakarta-Hong Kong trip on the new Garuda A330-200 was a pleasant surprise. The attendants were more energized and enthusiastic. One of them even took the time to explain to me how my seat and the in-flight video system worked, while I was served countless espressos and hors d’oeurves. When I mumbled disparagingly about the meal service, she looked downcast but insisted that I fill out a form “so that we can learn and improve, Pak .” Huh? That was new.

The seat was far more comfortable than either the Malaysia Airlines or even Cathay Pacific’s claustrophobic cabin set-up. (And yes, it really was flat.) The Airbus’s internal design was understated and subdued. If anything, the elegance was overly international and insufficiently Indonesian. Sadly, the stewardesses’ uniforms have not been updated, as they should be wearing kebayas instead. As I settled in to watch the in-flight movies, I soon forgot about the minor hitches and enjoyed the flight.

Even in the age of Ryanair and easyJet, a national carrier still plays an important role. It is a country’s flagship, embodying and, in turn, expressing the social, cultural and historical attributes of a people. Given the Indonesian culture’s diversity and scale, the responsibilities of a national carrier aren’t easy. Nevertheless, as the republic emerges from a “lost” decade, it is important that Garuda captures the enthusiasm and the warmth of its people. The airline needs to project itself as the “face” of its nation.

Garuda’s new planes and its new livery are great. But for me, the change in attitude, as demonstrated by the flight attendants, is far more important. They exuded pride and were genuinely excited with what they were doing. This kind of enthusiasm is infectious. It’s also transformational.

Source: Jakarta Globe

Karim Raslan is a columnist who divides his time between Malaysia and Indonesia.

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