Strategies to Revitalize Garuda Indonesia Route Profitability to Improve Financial Performance

DOI

10.2991/aebmr.k.201222.027How to use a DOI?

Keywords

Airline, Fleet Utilization, RP Model, COVID 19

Abstract

PT Garuda Indonesia (Persero) Tbk (“Garuda Indonesia”) is the Indonesian flag carrier. In 2011, Garuda Indonesia issued a long term plan: The Strategic Milestones Quantum Leap 2011-2015. The strategy map aims to expand the business massively, including the number of aircrafts in service. However, the world economy slowed down, and the overcapacity market directly impacted the massive expansion of the airline. The company reported losses in 2014. Since then, the company is struggling with fluctuated operating income. This research conducted a Root Cause Analysis for the business problems using 5 Whys. The first result of the analysis is the situation where the number of passengers is reaching saturation point while the regional airline fleet is still expanding, which has caused intense price competition among airlines. The situation forces Garuda Indonesia to keep offering low Passenger Yield in International routes. The second result is the oversupply condition where the available seat capacity is bigger than the market size. These factors impact two out of three main aircraft types operating in the domestic area. The production is declining, and aircraft utilization is low, resulting in negative performance. This research aims to find solutions to these issues by proposing the most suitable alternative scenario to reduce the impact of overcapacity on the financial condition using the Route Profitability (“RP”) Model. Calculation of the RP model has considered the effect of the COVID 19 pandemic on the aviation industry.

Copyright

© 2020, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Lidia Monika
AU  - Kinsenary Tjendrasa
PY  - 2020
DA  - 2020/12/23
TI  - Strategies to Revitalize Garuda Indonesia Route Profitability to Improve Financial Performance
BT  - Proceedings of the International Conference on Business and Management Research (ICBMR 2020)
PB  - Atlantis Press
SP  - 184
EP  - 189
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.201222.027
DO  - 10.2991/aebmr.k.201222.027
ID  - Monika2020
ER  -