EU Ban Cost Garuda About $9m Annually

The Jakarta Globe, Putri Prameshwari & Janeman Latul, April 3, 2009

State-owned carrier PT Garuda Indonesia has lost potential sales of about $9 million annually as a result of the European Union’s blanket ban on Indonesian airlines since July 2007, a senior company official said on Friday.

“We lost about 50 percent of our sales [to European passengers], worth between $750,000 and $1.5 million a month since July 2007,” Emirsyah Satar, Garuda president director, said late on Friday. “However, this potential loss in sales is actually smaller compared to our total sales of around $1.8 billion in 2008 alone. The main problem for us is the bad image about our airline.”

Emir also said that Garuda currently has no code-share agreement with European-based airlines. But even if there was one, the ban would have forced the airlines to terminate their cooperation with flag carrier Garuda Indonesia.

In July 2007, EU imposed a blanket ban on all Indonesian airlines from flying to Europe. The ban, a source of embarrassment to the government, was based on 69 recommendations — including the improvement of oversight — from the International Civil Aviation Organization’s audit of local airlines in 2004-07.

Garuda has repeatedly asked the EU audit team what it needed to do to improve its safety performance, including attending the hearing with the EU aviation council in Brussel last year, along with Mandala Airlines and Airfast, to ask for an exemption. The council, however, refused to grant the request.

“We have already asked EU auditors what else can be done to lift the ban, but they say that it is a regulatory problem,” Emirsyah said.

However, Transportation Minister Jusman Syafii Djamal blamed differing standards of safety regulation as the main reason why the EU decided to delay reviewing Garuda’s security measures until June, despite the fact that it has repeatedly passed international safety audits by the International Air Transport Association. EU was expected to review Garuda Indonesia’s security measures in April.

“There is no guarantee that the European Union would lift its blanket ban on Indonesian airlines. The EU has its own standard in assessing our aircraft,” Jusman said.

He added that there should be a single international safety standard for air transportation to avoid overlapping of regulations between international aviation organizations.

A statement released by IATA on Wednesday said that Garuda Indonesia, the only IATA member from Indonesia, was listed on the IATA Operational Safety Audit registry. Some 230 airlines from around the world are members of IATA, which conducts a safety audit for all of its members once every two years.

Herry Bhakti, director general of civil aviation at the Transportation Ministry, said that as of March, Indonesia had fulfilled 90 percent of ICAO’s 69 recommendations. However, in their last meeting, the EU had not decided to lift the ban, and delayed it for another three months instead.