Garuda Indonesia, the country’s national carrier, is cutting unprofitable routes and renegotiating contracts as part of cost-cutting measures after storiesing a US $213.4 million net loss last year. This was a significant drop from a profit of $9.4 million in the previous year.
The airline blamed the losses on a near-25 per cent spike in jet fuel prices and a drop in airfare that suppressed passenger yield to 3 per cent.
Last year, the airline had axed 17 routes in order to stem further loss, it is planning to cut 10 more in 2018.
Although the affected routes that will be facing the axe has not been announced yet, a report stated that Pahala Mansury, Gadua Indonesia Chief Executive Officer did mention that the Denpasar-Chengdu route was among those under review for possible termination over the next few months. “We are restructuring the routes, including by reviewing low-performing routes,” said Mansury.
He further added that cutting down of certain routes did not mean that the airline will not be exploring potential new routes. The step is being taken only to reduce the possibility of making further losses.
Flight cancelations due to the eruptions of Mount Agung in Bali since late November had resulted in losses to Garuda of between $1 million and $1.5 million per day. But Mansury said that situation had now improved after the Chinese authorities in late January lifted a travel advisory against visiting Bali.
Mansury added that Garuda was considering adding new international routes serving Hanoi in Vietnam and Manila in the Philippines, however, he did not elaborate further on the airline’s plans to fly to the United States and Russia.
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