Garuda Indonesia: Why The Flag Carrier Is Not The Country’s Largest Airline

Garuda Indonesia has served as the country’s flag carrier for seven decades. With its headquarters in Jakarta’s Soekarno-Hatta International Airport, it operates domestic and international flights and is the second-largest Indonesian airline by fleet size, behind the LCC Lion Air.

Garuda-fires-pilots-drugs
Garuda Indonesia has seen quite a few ups and downs in the seven decades of its existence. Photo: Getty Images

Garuda Indonesia came into existence during Indonesia’s War of Independence and has seen massive ups and downs since then. The airline grew into a significant carrier with rigorous fleet consolidation through the 60s and 70s, followed by a massive rebranding in the mid-80s. During its peak from the late 80s to early 90s, Garuda saw an ambitious expansion of its international market before a series of global events, scandals, and mismanagement paused its somewhat successful run.

Humble beginnings

Indonesia’s national airline came into existence during the Dutch–Indonesian Round Table Conference in 1949. It was decided that the outgoing Netherlands East Indies government would surrender all assets to the new government, including the KLM-IIB airline, a subsidiary of KLM, that had served the Netherlands East Indies government since 1928 and was previously known as K.N.I.L.M.

During the conference, President Soekarno came up with Garuda Indonesian Airways (GIA) as the name of the new national airline. The carrier’s first flight as GIA took place on December 28th, 1949 to fly President Soekarno from Yogyakarta to Jakarta.

Garuda Indonesia: Why The Flag Carrier Is Not The Country’s Largest Airline
The carrier started operations with the Douglas DC-3 airplane in 1949. Photo: Gunkarta Gunawan Kartapranata via Wikimedia Commons

Expansion

Garuda began commercial service in the ‘50s using the Douglas DC-3 Dakota airplane with flights to Bali. All through the ‘60s, the airline expanded its fleet, adding more DC-3s along with Catalina seaplanes and Convair 240s. By this time, the carrier was flying to European cities such as Amsterdam and Frankfurt with fuel stopovers in Sri Lanka and India. By 1977, Garuda had become an all-jet airline, with a fleet of Fokker F-28 fellowship twinjets, Douglas DC-8s, DC-9s, and DC-10s.

The 80s saw some significant changes in the airline. Garuda became the first carrier to operate the Airbus A300B4 with a forward-facing crew cockpit that eliminated the need for a flight engineer. Then came the massive restructuring plan in 1984 that paved the way for new airplane purchase orders, brand new logo, livery, crew uniform, and a different overall corporate identity, including a name change to Garuda Indonesia.

Garuda Indonesia: Why The Flag Carrier Is Not The Country’s Largest Airline
Over the decades, Garuda has flown many aircraft types, including the McDonnell Douglas DC-10. Photo: Michel Gilliand via Wikimedia Commons

The rebranding strategy worked, and Garuda saw its peak operational years in the late 80s and early 90s, operating popular heavy bodies at the time such as the 747s and MD-11s to major destinations in Europe, Asia, Australia, and North America.

Troubled times

By the mid-90s, rising fuel prices had started eating into Garuda’s profits. The situation was made worse by the Asian Financial Crisis of 1997-98 following which, the carrier had to sell some of its planes, cancel orders and close down many unprofitable routes. During this time, the airline had to let go of thousands of employees.

The next few years brought further turbulence for Garuda. The 9/11 attacks in the US, the 2002 Bali bombings as well as the 2004 Tsunami weakened the already struggling carrier.

Garuda Indonesia Airbus A330 Getty
The late 90s saw Garuda Indonesia go through turbulent times, with the Asian financial crisis, accidents, and bad decisions all taking a toll on its finances. Photo: Getty Images

By this time, Garuda had also come under the scanner for its safety issues. Its two plane crashes in the late 90s – Flight 865 in Fukuoka and Flight 152 in Medan – saw the US and many European nations ban the airline for a few years. Then, the 2007 crash of Garuda flight 200 in Yogyakarta saw an all-encompassing two-year ban by the EU between 2007 and 2009 on all Indonesian airlines.

Last two decades

In 2009, Garuda announced a massive restructuring program called the “The Quantum Leap.” This involved a significant redesign of the carrier’s brand, fleet, network, and overall business strategy. The airline launched an IPO in 2011, but it drew lukewarm reception from the public.

In the next few years, Garuda undertook cost-cutting drives and placed an airplane order of $20 billion at the 2015 Paris Air Show. Years of financial losses, mismanagement, structural inefficiencies, and scandals came to a head in 2020 with the COVID pandemic when the carrier faced a net loss of $2.4 billion. As of May 2021, Garuda’s total debt was $4.9 billion.

Currently, the airline is facing bankruptcy, and the government is trying hard to keep it afloat by negotiating with lessors and other creditors. Garuda might have to cancel all long-haul flights and retire the majority of its fleet given the present circumstances.

With such seemingly insurmountable troubles, the future of Garuda Indonesia looks precarious.

14 Shares: