Wednesday, January 7, 2009

Garuda: Totally insane?

I don't know what they're smoking in the executive suites of Garuda Indonesia, but I'll definitely have some.

In the worst economic crisis since the Great Depression, when other airlines are frantically slashing routes, mothballing new orders and looking for spare coins under the seat cushions, Garuda is doing the exact opposite. It's actually adding routes, like the new Singapore-Yogyakarta service, and planning to double its entire fleet by 2013.

What gives? It seems it's not really a profit grab - after all, nobody's making profits these days - but an effort to gain significant market share while other carriers are cutting back. With a planned 128 aircraft, including a fleet of new Boeings being delivered in 2009, Garuda will have a much bigger Asia-Pacific footprint (and more planes to dispatch to Europe, once the EU ban is eventually lifted). They'll also have the wherewithal to muscle in on new routes like Denpasar-Adelaide and Surabaya-Hong Kong.

Savvy, or suicidal? As investing guru Warren Buffett is fond of saying, "Be fearful when others are greedy, and greedy when others are fearful." So though it seems clinically insane, maybe Garuda's going against the grain might actually be a stroke of genius.

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Brett said...

I know it looks crazy, but they are barely keeping up with demand. The biggest demand/growth is domestic. They also need to expand their network to compete with the likes of Air Asia and the Qantas subsidiary - or die. They're actually doing pretty well...

Christopher Taylor said...

More power to them, then! Now good luck getting Boeing to deliver those planes on time ... :)