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UPDATE 1-Garuda Indonesia plans to double fleet by 2025
November 14, 2013 / 12:10 PM / 4 years ago

UPDATE 1-Garuda Indonesia plans to double fleet by 2025

* Aims to order 200-250 aircraft from 2014

* Plans to buy some from makers, lease the remainder

* Looks to double fleet to 350-400 aircraft by 2025

By Siva Govindasamy

HONG KONG, Nov 14 (Reuters) - Indonesian flag carrier Garuda Indonesia plans to add up to 250 aircraft by 2025 to effectively double its fleet and meet demand in one of the world’s fastest-growing aviation markets.

Garuda is rising to the challenge of privately held Lion Air, Malaysia’s AirAsia Bhd and PT Mandala Airlines - part-owned by Singapore’s Tiger Airways Holdings Ltd - who are expanding in a market which analysts expect to become one of the largest within a matter of years.

The airline will finalise plans by year-end and seek board approval next year to order another 200-250 planes, taking its fleet to 350-400 aircraft by 2025, Chief Executive Emirsyah Satar told Reuters on the sidelines of an industry event in Hong Kong.

Garuda had 131 planes as at September-end, which its order book will take to 194 by 2015. The expanded fleet will be used by Garuda and low-cost subsidiary Citilink, Satar said.

He said the airline plans to buy some of the 200-250 planes from manufacturers and lease the remainder, reducing pressure on its balance sheet.

Garuda is looking for single-aisle aircraft for routes of up to five hours, and larger wide-body aircraft for medium- and long-haul services, Satar said.

Boeing Co’s 737 Max and Airbus S.A.S.’s A320neo would satisfy Garuda’s short haul needs. Boeing’s 787 and 777 and Airbus’ A350 could be contenders for its medium- and long-haul requirements.

ISLAND HOPPING

Robust economic growth over the past few years has positioned Indonesia to become one the largest economies by 2030. Industry participants widely expect attendant rising incomes to encourage Indonesians to travel between the archipelago’s myriad islands by plane rather than ferry.

In anticipation, low-cost carrier Lion Air has ordered more than 500 Airbus A320s and Boeing 737s to meet its fleet projections for the next decade.

There will be 593 planes operating in Indonesia by 2015 according to a projection from the Directorate General of Civil Aviation, but that is 320 short of the number needed based on current market projections, said Satar.

“Passenger growth is going to be one-and-a-half to two-times GDP growth. Indonesia is still growing, and the last six years passenger growth has reached double digits. The market is there - we are an archipelago, the purchasing power of Indonesians is increasing. The challenge is infrastructure.”

Gross domestic product grew 6.23 percent last year.

Indonesia’s airports are bursting with main gateway Soekarno-Hatta in Jakarta operating above capacity. The government plans to expand the airport and possibly add a second. Plans are also afoot to build dozens of airports and expand others across the country.

“You look around Indonesia - the growth of the regional hubs and the mid-sized cities will be phenomenal. There is rising demand and the airports will be built there. The challenge is how fast is the execution of these plans.”

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