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Moving Already: Soekarno-Hatta Airport is well over the capacity it was
designed for and among the busiest in the world
Jakarta Globe, Bloomberg, Harry Suhartono, Mar 05, 2015
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| Garuda plans to acquire 250 aircraft over 10 years and increase the fleet of its low-cost carrier unit Citilink Indonesia four-fold to 120 planes by 2022, its chief Arif Wibowo said. (JG Photo/Jurnasyanto Sukarno) |
Jakarta’s
Soekarno-Hatta airport, among the world’s 10 busiest by passenger traffic,
handles twice the volume it was designed for; Arif Wibowo plans to push that
limit further.
The new
chief executive of Garuda Indonesia wants to take over the airport’s third
terminal next year after a revamp and reserve it for the state carrier’s
expansion. Garuda plans to acquire 250 aircraft over 10 years and increase the
fleet of its low-cost carrier unit Citilink Indonesia four-fold to 120 planes
by 2022, Arif said in an interview on March 3.
“By next
year, we will make terminal three a dedicated terminal for Garuda Indonesia,
and Garuda will make it the base for SkyTeam in the southern hemisphere of the
Asia Pacific region,” Arif, 49, said in an interview at his Jakarta
headquarters, referring to the alliance of 20 airlines including Air France-KLM
and China Southern Airlines, Asia’s biggest carrier by passengers.
A Jakarta
hub for SkyTeam would help its members tap the Australian market and put it
into competition with Singapore’s Changi Airport and a larger Star Alliance
carrier network that includes Singapore Airlines.
Singapore
is not standing still, with plans to almost double the capacity of its airport
over the next decade, as economic growth in the Asia-Pacific region makes it
more affordable for people to travel by air.
Garuda’s
competitors aren’t idling either. Lion Group, Indonesia’s biggest carrier,
plans to have a fleet of 1,000 planes, its founder Rusdi Kirana said last year,
after he agreed to buy 230 Boeing 737 planes in 2012 and another 234 Airbus
jets in 2013.
Garuda’s
shares rose as much as 1 percent on Thursday to Rp 530.
The shares
have risen 9.5 percent in the past year, trailing the 17 percent gain in the
benchmark Jakarta Composite Index and the 36 percent advance in the Asia
Pacific Airlines Index.
Soekarno-Hatta
handled 60 million passengers in 2013, the 10th-most in the world and ahead of
Singapore and Hong Kong, according to data from the International Air Transport
Association.
State
airport operator Angkasa Pura II plans to sell as much as Rp 6 trillion ($460
million) of bonds this year and next to fund renovations to the Jakarta
airport, president director Budi Karya Sumadi said in February.
Jakarta
airport’s terminal one, dating from 1985, handles domestic routes. About 1.6
million Indonesians flew from Soekarno-Hatta across the world’s largest
archipelago in January, according to government data. Apart from revamping the
terminal buildings, the government is building a rail line to improve transport
to Jakarta’s center.
Citilink
The second
terminal, used by Garuda and most international carriers, presents visitors
with a warren of hallways to navigate immigration, before a gauntlet of baggage
handlers and taxi touts.
The third
terminal, the most modern, is currently reserved for low cost carriers and used
by AirAsia.
Arif, who
spends his free time racking up road miles on his bicycle, said Citilink would serve
its first international routes in 2016, to compete with AirAsia and Tiger
Airways.
President
Joko Widodo’s government tapped Arif, formerly the chief of Citilink, to run
Garuda in December.
The
president has called for reviews of the country’s aviation industry after
AirAsia’s Flight 8501 from Surabaya to Singapore plunged into the Java Sea on
Dec. 28, killing all 162 on board.
So far the
government has suspended the license of AirAsia for that route, found other
airlines in breach of permits and removed state officials involved.
More planes
Garuda
plans to increase its fleet size by an average of 6 percent to 7 percent a year
over the next decade and most of the plane orders will be for single-aisle jets
to expand domestic and regional destinations as feeders for its long-haul
aircraft to Europe, Middle East and North Asia, Arif said.
It
currently flies to London, Amsterdam and Tokyo, after a European Union ban was
ended in 2009.
In October,
the airline placed a $4.9 billion order from Boeing for 50 single-aisle Boeing
737 series planes.
“We just
entered the global arena, but right now our size is not enough,” Arif said.
“We need to
capitalize on what we have and become a global player. That is our task going
forward.”
Garuda
expects to carry a total of 36 million passengers this year, an increase from
almost 30 million in 2014.
Garuda is
expected to report a $184 million loss for 2014, according to the median
estimate of analysts in a survey.
That would
be its first annual loss since listing in 2011.
The drop in
oil prices should help Garuda’s financial performance in 2015, with 80 percent
of its fuel use unhedged, said Alan Richardson, whose Samsung Asean Equity Fund
outperformed 96 percent of peers tracked by during the past five years.
“I hold the
stock for oil price,” he said by e-mail. “Profits will benefit greatly,” he
said.
The
company, which uses the national symbol of a mythical eagle as its insignia,
plans to sell the country’s first corporate global sukuk next month to cut its
funding costs.
Arif said
the company is using an exchange rate assumption of 13,000 rupiah per dollar
for its 2015 planning, and is already working on several scenarios should the
currency weaken to 14,000 per dollar, without giving details.
“Looking at
our operating performance for the first two months, we are performing better
than last year,” Arif said.
Bloomberg
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