Garuda to spin off cargo division into separate business entity

National flag carrier Garuda Indonesia plans to make its cargo division an independent entity next year so it can expand its cargo business with more flexibility.

President director Emirsyah Satar said the separation of Cargo Garuda Indonesia would help boost its annual cargo revenue by more than 20 percent.

“We see a lot of opportunity in cargo because domestic logistics demand continues to increase every year in Indonesia,” he said, adding that the separation would help the Garuda business group as a whole because the spin-off would help it to concentrate on other businesses. “We are still preparing everything, we will be ready next year.”

The preparations by the airline include the expansion of its cargo terminal at the country’s main gateway Soekarno-Hatta International Airport to 4,625 square meters last year , which will cost about Rp 5 billion (US$485,000), as well as the opening of more service centers in big cities across the country. There are up to 40 service centers slated to be opened this year, including in Yogyakarta, Semarang, Medan, Surabaya, Kupang, Jayapura and Biak.

According to recent data from business consultant firm Frost & Sullivan, Indonesia’s logistics sector is projected to grow by 14.5 percent to Rp 1,634 trillion throughout this year.

Compared to other sectors, air freight volume is expected to see the highest increase — of 19.6 percent — and reach 1.16 million tons from 970,000 tons in 2012.

The airline had previously separated its low cost flight services into a separate company — PT Citilink Indonesia — in July last year so it could better compete in the growing budget flight market.

After separating from Garuda, Citilink’s business grew significantly. It doubled the number of planes it operates, from 10 planes in 2012 to 22 planes as of July this year, which fly to 20 domestic destinations.

Garuda has a number of subsidiaries such as maintenance, repair and overhaul (MRO) company GMFAeroAsia, hotel operator Aerowisata, travel agency Aerotravel and catering arm Aerofood.

The firm has also announced it plans to spin off GMFAeroAsia in the next few years.

Garuda recently signed an agreement with Amsterdam-based trucking company Jan de Rijk to help expand its cargo network in Europe.

Through the agreement, the airline will be able to send its cargo to 30 destinations across Europe including Paris, Frankfurt, Dusseldorf, Hamburg, London, Barcelona, Roma and Madrid.

The firm is seeking more partnership with global companies in the second half of this year.

Cargo Garuda Indonesia transported 233,000 tons of cargo in 2012, up by 12 percent from the previous year. The cargo division aimed to book $240 million in revenue this year, up from $209 million in 2012.

The national flag carrier began the operation of its newest Boeing B777-300 Extended Range (ER) aircraft early this month flying the Jakarta-Jeddah route that was traditionally served by the aging B747-400s.

With this sophisticated aircraft, the carrier is upgrading its service by delivering a premium first class service with onboard WiFi connection that enables passengers to browse the Internet, use social networking sites and send instant messages during the flight. Garuda’s B777-300ER has 314 seats, eight of which are in first class, 38 seats in business class and 268 seats economy class.

Source:  http://www.thejakartapost.com