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Garuda Indonesia has announced a “short-term” restructuring
programme as it seeks to stem a tide of financial losses.
The ‘Quick Wins’ initiative will include network restructuring, fleet
management and cost reductions.
The international network expansion is being scaled back, and
refocused on China. Unprofitable routes to face the axe include
Denpasar to Brisbane and Tokyo Haneda, and Jakarta-Haneda. Plans
to launch a new Jakarta-Nagoya service have been put on ice.
Garuda will also adjust flight schedules to various cities in Australia
and Europe. “Following the adjustments made on flight routes in Japan
and Australia, Garuda will maximize on the resources gained from
these adjustments and focus on developing routes in China besides
the three major cities currently served by Garuda (Beijing, Shanghai,
Guangzhou), as well as developing market potentials to the Middle
East, especially expanding the umrah market,” says Garuda.
The carrier introduced a scheduled service from Denpasar to Beijing
in January, and plans to launch charter flights connecting Chengdu,
Chong Qin, Ningbo, Kunming, Jinan, Harbin, Xian, Shenyang and
Chengzhou to Denpasar and Manado from February to July this year.
The changes to fleet management include “early termination” of
several aircraft, “subleasing” and adjusting the number of seats in
business class in a narrow-body Boeing 737-800NG, from 12 seats in
business class to eight seats, therefore increasing seat capacity in the
economy class (attracting a wider market) of up to 15 — 20 percent,
and reducing unit costs-per-seat.
Garuda says it will also reduce overhead costs up 10 percent
by adjusting costs that do not yield any additional value and by
increasing employee productivity. “For example, Garuda will not
increase the number of employees in the event of the arrival of 15
new aircraft in 2015.” Garuda says this will enable it to reduce
the current aircraft: employee ratio from 1:60 to 1:50. Other plans
include, “Plans include enhancing synergy between Garuda and
Citilink to achieve optimum business development.” — Colin Baker
China’s ARJ21 regional jet has finally received type certification by
the Civil Aviation Administration of China (CAAC).
The project was first announced in 2000 and formally launched in
2002, thus having the dubious distinction of being one of the longest
running programmes to receive type certification in aviation history.
OEM Comac says the CAAC is now examining the first aircraft to
be delivered to launch customer Chengdu Airlines - which belongs to
Comac. Entry into service is planned for April or May 2015.
The ARJ21’s maiden flight took place in 2008, but the programme
was bedevilled by a lack of familiarity with aircraft certification
processes — among plenty of other issues.
“The engines and avionics are pretty much identical to any other
RJ designed 15 years ago. The dominant RJ maker, Embraer, is now
focused on phasing out the same CF34 engine that COMAC is just
phasing in,” notes Richard Aboulafia, consultant at Teal Group.
“It offers exactly nothing new. In fact, it’ s 15% heavier on a
per-seat basis than any of its competitors. It looks very much like the
DC-9, a classic example of reinventing the wheel.”
The Chinese market is pretty small and is already well catered for
by Embraer and Bombardier, Aboulafia says. China could force its
national airlines to take these planes.
“But that would damage the airlines’ competitiveness. The
government, in effect, would need to choose between a national
aircraft and healthy national airlines.”
The variant that received certification — and the only launched
version, is the 78-seater ARJ21-700.
Comac has claimed up to 340 orders for the ARJ21-700, although
Teal Group has identified only 77, with the sole foreign entity being
GECAS with five on order. This is almost certainly part of GE group’s
wider ambitions in China.
“They might try to certify this plane outside of China as a
learning experience, but I can’t imagine anyone actually buying this
hopelessly obsolete plane,” says Aboulafia. — Colin Baker
ARJ21 finally certified
Garuda restructures with ‘Quick Wins’
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