Garuda Indonesia is to aggressively expand its low-cost Citilink division in an attempt to retain its dominant position in the domestic market in the face of growing low-fare challengers.
Executive vice-president commercial Bachrul Hakim says Citilink will have its Boeing 737-300 fleet greatly expanded as it progressively assumes responsibility for most of the group's flights of less than 2h, both domestic and international.
Citilink operates four 737-300s on domestic routes, but the fleet will grow to 10 by the end of the first quarter of next year, most on lease from GE Capital Aviation Services. Meanwhile, its small fleet of Fokker F28s is being phased out.
By the end of next year, 15-16 737-300s will be in operation, says Hakim, followed by "many" more in the following two years, some of which could come from Garuda's own fleet.
"Expansion is a must for Citilink," he says, adding that the no-frills carrier could be operating 60-70% of the state-owned airline group's under-2h flights within two or three years.
Citilink was established in 2001 as a domestic feeder carrier operating F28s. But as new private airlines have been set up following an easing of licencing and ticket pricing restrictions, full-service domestic operations have come under intense pressure and Garuda sees Citilink as its tool to help retain market share.
Separately, Hakim says Garuda is hoping to strike a deal with Boeing to enable it to take delivery of six long-deferred 777-200ERs and 18 737-700s.
The aircraft were ordered before the carrier fell into serious financial difficulty in the 1990s and deliveries were pushed back several times. Hakim says Garuda does want the aircraft but cannot afford to buy them because it is still paying back its sizeable debt.
"We are in negotiation with Boeing," Hakim says. "Because of our financial situation, we don't have the luxury of being able to buy the aircraft. So one option may be to lease the aircraft from the manufacturer.
NICHOLAS IONIDES / JAKARTA
Source: Flight International
