Garuda Readies for Indonesia’s Surrender to Open Skies

 - December 2, 2013, 10:25 AM
Garuda Indonesia presses into service its first ATR 72-600 on December 3. (Photo: ATR)

Despite Indonesia’s apparent ambivalence toward an open skies policy among the 10-member Association of Southeast Asian Nations (Asean), Garuda Indonesia continues to prepare for its home country’s full participation in the accord when it takes effect in January 2015. Most recently, on November 25, the Indonesian flag carrier introduced a new sub-brand called “Explore” ahead of a December 3 launch into service of its first ATR 72-600. Also operating Bombardier CRJ1000s as “Explore Jet,” Garuda fully expects to fulfill this year’s plan to take 26 airplanes as part of its long-term Quantum Leap 2011-2015 expansion program and in anticipation of its induction into the SkyTeam global alliance in March.

Originally expected to take effect this year, plans for Asean Open Skies hit a snag in 2010, when Indonesia said it would limit full access to Surabaya, Jakarta, Medan, Makassar and Denpasar, while bilateral agreements would govern access to other airports. Today, Indonesia and the Philippines remain the only countries of the 10-nation Asean bloc not to sign the open skies pact, but according to Malaysian deputy minister for transport Abdul Aziz Kaprawi, both will likely join soon. Singapore, Malaysia, Thailand, Myanmar, Vietnam, Brunei, Cambodia and Laos constitute the rest of the Asean community.

With a population of 240 million and a growing middle class, Indonesia already ranks as the bloc’s largest and most competitive market. The implementation of open skies stands to make competition still more intense. Kuala Lumpur-based AirAsia and Singapore’s Tiger Airways have already established a strong presence in the Indonesian market. The former operates to 15 cities with multiple daily frequencies while Tiger Airways offers flights to eight.

Meanwhile, Asean’s open skies policy appears sure to enhance the importance of hub airports. Indonesia’s Lion Air, for one, plans to use Singapore Changi Airport as a base for its operations to tap into other markets. Aware of the heavy outbound traffic from Kuala Lumpur, Lion Air also has established a joint venture airline with Malaysia’s National Aerospace and Defense Industries called Malindo Air. The carrier, based at Kuala Lumpur International Airport (KLIA), started operations in March. Operating a growing fleet of Boeing 737-900ERs, it aims to expand its network to cover the entire Asean, China, Japan and India.

Indeed, the promise of open skies already appears to have stimulated development within the region and beyond. Notwithstanding resistance from Indonesia and the Philippines, it seems the Asean could realize its objective well before the policy’s actual implementation date.