Etihad’s Garuda deal is strategic issue for Australian carriers
In a reminder that Indonesia is much more than Bali, Etihad has stitched up a deal with Garuda that could also stitch up Qantas, Jetstar and Virgin Australia
It is inevitable that sometime, hopefully soon, Australians will realise that Indonesia is about far more than beautiful Bali, at the end of an uncomfortable flight of around six hours from Sydney or Melbourne.
It is a massive emerging nation of 240 million culturally diverse people who are on average, very young, and increasingly determined to find their place in the sun, which won’t be on a beach.
Which is why the just announced Etihad code share with Garuda is more interesting for what it says about comparative disinterest in Indonesia by Australia’s airlines than its immediate relevance to Australian travellers, which is next to zero at this stage.
Etihad has been pumping out press releases for some time now about the expansion of its code share and alliance arrangements which world wide which mean nothing to Australia originating flights until such time as any of them give rise to an application to the IASC and as necessary the ACCC for capacity and approval to extend them into this market.
But the releases are important as reminders that for all of the verbal commitments by Qantas and Virgin Australia to the merits of more virtuality in their alliances and commercial arrangements, whole sections of the neighborhood, the Asia-Pacific hemisphere, are terra incognita when it comes to their selling non-stops on their own or with anyone else deep into Indonesia, or China, or India, or the Philippines and so forth.
This is the full Etihad announcement, with the references to Australia highlighted.
ETIHAD AIRWAYS SIGNS NEW CODESHARE DEAL WITH GARUDA INDONESIA
Etihad Airways, the national airline of the United Arab Emirates, today signed a new codeshare agreement with the Indonesian flag carrier, Garuda Indonesia.
The agreement, which comes into effect on October 28, 2012, is the airline’s 42nd codeshare.
In the first phase of the partnership, Etihad Airways will place its ‘EY’ code on Garuda Indonesia’s services between Jakarta and Denpasar (Bali), and Jakarta and Kuala Lumpur. Subject to regulatory approval, Garuda Indonesia will place its ‘GA’ code on Etihad Airways flights from Jakarta to up to 31 destinations in the GCC, Levant, Africa, Europe and North America.
Subject to regulatory approval, the airlines plan to expand the scope of the agreement to include more destinations in each other’s network and offer customer benefits such as frequent flyer program reciprocity and airport lounge access.
James Hogan, Etihad Airways President and Chief Executive Officer, said the codeshare with Garuda Indonesia was a key plank of the airline’s network development strategy.
“The partnership with Garuda Indonesia will contribute to Etihad Airways achieving its goal of expanding its network and brand presence in South East Asia.
“Indonesia, the world’s fourth most populous nation, is an important source of global tourism growth and this new agreement will position both airlines to benefit from the strong demand for travel between Indonesia and the Middle East and Europe that we have seen in recent years.
“It will also stimulate trade in foodstuffs, manufactured goods and other commodities between Indonesia and trading partners in the western hemisphere which, in turn, will contribute to the profitability of the airlines’ cargo operations on the route.
“Etihad Airways is keen to expand the scope of cooperation with Garuda Indonesia to include new destinations – particularly in Indonesia – and to offer our guests a wider choice of travel options.”
Emirsyah Satar, President and CEO of Garuda Indonesia, welcomed the cooperation of the Etihad Airways’ management team in establishing the new partnership.
“This codeshare partnership between Garuda Indonesia and Etihad Airways will further strengthen the global network of both airlines and provide increased benefits to all our passengers.
“Through this partnership, Garuda Indonesia will be able to extend its service to Europe, North America, Middle East and Africa, and Etihad Airways will provide more convenient connections for their passengers in Indonesia, Australia and Japan.
“Through this mutual partnership, Garuda Indonesia will continue to improve its services and will ‘bring the world to Indonesia’.”
The codeshare will go on sale on October 18 for travel from October 28, 2012.
Keep in mind that a real or virtual hub in Singapore isn’t relevant to Indonesia, given the back tracking involved, just as Dubai won’t really work as a reverse hub to India, and a very time consuming one, if you are starting out for a city in the sub-continent from Australia.
Indonesia is, seriously, a challenge and a promise that neither major Australian carrier has given the attention it merits. Virgin Australia will get its lunch stolen in Indonesia by its equity partner Etihad just as thoroughly as Qantas will in China if it seriously believes that Jetstar Hong Kong or premium connections in Hong Kong to Dragonair flights are an answer to non-stop PRC-Australia flights by China flag carriers.
Neither Australian flag carrier can sustain the necessary range of non-stop flight into Asia beyond Singapore or Hong Kong with their own flights, but the need to secure those growth opportunities them with code shares or alliances continues to be neglected, and in Indonesia in particular.