Garuda Indonesia is the national flag carrier of Indonesia, which operates scheduled flights from its base in Jakarta to a number of destinations in Asia, Australia, Europe, the Middle East and domestically. Garuda CEO Irfan Setiaputra explains that its partnership with Etihad gives UAE travelers landing in Jakarta the chance to use Garuda as their springboard to explore the rest of Indonesia. Setiaputra also points out, from a tourism perspective, there is much more to Indonesia than Bali, and Garuda is working to promote and open up more of the archipelago nation’s incredible destinations
Profits are up in the airline industry, with spending in first class rising and people spending more money on travel in general. But there are effects of the coronavirus that now must be considered. Can you explain what you’re doing to mitigate the impact of the coronavirus?
Traveling is a key economic activity, especially in Asia, where we have a growing middle class. In Indonesia, considering our unique geographical conditions coupled with a rising middle-class, and a strengthening domestic an international tourism industry, traveling willl become even bigger in the future. However, due this coronavirus outbreak, we have seen a significant impact on the aviation industry due to the resulting travel restrictions, as well as a slump in demand among travelers, including for Garuda Indonesia. At the end of the day the virus is the cause. So the impact of the coronavirus is really about the sentiments of people. They start hesitating and asking: ‘Should I go, should I postpone, should I stay?’
The biggest impact for Garuda as a company is the closing of Saudi Arabia routes. We are the national carrier and have a very large market for Umrah and Hajj, as Indonesia has the world’s largest Muslim population. We have four flights to Saudi Arabia daily, so that is impacting us heavily. The condition of this pandemic is definitely a challenging situation for us.
Anticipating the impact of Covid-19 on the company’s business and financial activities, we have conducted strategies to mitigate the stability of the company’s condition. Our Covid-19 recovery strategy includes focusing in developing domestic and regional routes and the cargo business. One of our efforts is through optimizing route revenue (aviation services) in the domestic and regional aviation sector with special promo offers so as to increase market traffic. In the future, we will also make efforts to develop domestic and regional routes through a variety of marketing programs with special promo offers so as to increase market traffic to a number of leading domestic tourism destinations.
Our Quick Win 2020 strategy that we set in place to increase revenue includes: optimizing capacity, pricing and channel distribution; a promotion program for domestic routes, especially to10 leading destinations and international routes; increased ancillary revenue; adding potential regional routes by optimizing the Denpasar hub, such as Denpasar-Brisbane, Denpasar-Perth, Denpasar-Mumbai, Denpasar-Kuala Lumpur, Denpasar-Bangkok, Denpasar-New Delhi and Denpasar-Dili.
Of course business most go on and there has been $23 billion worth of deals with the UAE. There is going to be a lot more investment coming from the UAE. How are you supporting travel from the UAE – not only business-wise, but also in terms of halal tourism?
Right now we don’t have any flights to the UAE. But we do have a strong partnership with Etihad. With its network, I think Etihad is in a good position to act as a channel to bring Indonesian people anywhere in the world. We expect this partnership will strengthen in the future, and we can bring Etihad’s customers who are coming to Jakarta, or even Denpasar, to other areas in Indonesia. As the world’s largest Muslim country, Indonesia has a great potential for halal tourism.
The minister of tourism is trying to heavily promote 10 destinations outside of Bali. Bali is still fantastic for so many reasons. But we have lots of other fantastic destinations also. We are working very closely with the minister of tourism, carrying out lots of initiatives in promotion and in attracting inbound arrivals. Garuda is very focused on two hubs, Jakarta and Denpasar. But we are working with the minister to look at the possibility of connecting new areas. The UAE is a saturated market where we realize it would be hard to compete, therefore we prefer to strenghten our partnerhip with Etihad and Emirates to expend our UAE market.
People from the UAE spend $79 billion on inbound tourism. Can you speak to these tourists about why they should choose your airline and why they should visit these new ten destinations?
As CEO of Garuda, I promote Indonesia as one of the best destinations in the world. For the UAE market, through our strong partnership with Etihad and Emirates, we aim to bring UAE travellers to enjoy the beauty of Indonesia through Jakarta.. For other countries’ travelers who normally use UAE as a transit point, we would also like to propose to them other options. For instance, we have a direct connection with Amsterdam. With this connection, we are opening options for people who want to travel direct.