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.
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Hi Ben
Don’t know if you were aware of the fire in a Boeing 737-800 of Corendon Airlines in Turkey. Many people were hurt because the 737 over wing evacuation does not provide them with a safe and reliable way to get to the ground. I think this is a very important safety issue. No new plane would be certified with this poor a level of safety. The 737 only sneaks it in because it was certified back in the 1960′s.
Yet Boeing is going to introduce the MAX, with exactly the same inadequate evacuation system in place. There are not enough doors for a safe in a 737, there is no safe way off the wing of a 737. I think it is a scandal, and it puts people’s lives at risk purely to benefit Boeing and save them money. Boeing knows this and it’s customers know this. I think you are the kind of journalist who would raise this issue, since most airline reporters these days don’t want to rock the boat or have no real knowledge of the industry.
” comparative disinterest in Indonesia by Australia’s airlines ”
Well, (1) its planes keep falling out of the sky and (2) Europe only recently allowed Indonesian planes back into their air space.
Nuff said!
Roger,
Agree with your concerns about the safety record in Indonesia in spades, but their air traffic control system may not be any more dangerous than ours, pending the final report into what if any role it had in the loss of the Sukhoi Superjet 100 on a demo flight earlier this year.
I always thought it a bit rich that France lead the charge to ban Indonesian carriers from European airspace when on the statistics the most dangerous airline one could board in the developed world on the current figures is Air France.
But I do strongly agree with your concerns about flying in Indonesia, having lost a colleague in the Yogyakarta crash in 2007 and note that another suffered serious life time impairment from injuries.
Merve,
I appreciate your concern about the Corendon Airlines crash. Perhaps the best summary of the situation is found here in the Aviation Herald. http://avherald.com/h?article=457672a7&opt=0
However the 737-800′s exits were certified to the same standards as those of comparably configured A320s, and assuming the undercarriage hasn’t collapsed or remained retracted when you get to the point where you have to jump off the wing, it is actually higher off the ground than that of the Boeing. I think the real concern in the evacuation characteristics of both the 737s and A320s is when they make a survivable forced landing on water, as in both families the airliners come to rest with the tail depressed and the water level higher than the bottom of the rear door sill.
As a result the safety drill on both types is to prevent passengers from deploying the rear inflatable exits and inadvertently sinking the jet. We saw this in the US Airways ditching in the Hudson where the leak that eventually caused it to sink, fortunately after everyone had escaped, came through the seal at the bottom of a rear door. The cabin attendant seated at the rear of that jet had a major struggle to discourage panicked passengers from trying to use the rear doors and had to yell at them to go to the overwing exits, which is the trained response.
I think many would agree with your concerns about exits however, and would welcome the single aisle jet makers installing much better escape packs.
@Roger, I think Ben is suggesting that while Australian travellers have to an extent been wary of flying Indonesian airlines given their sometimes patchy safety records (which has admittedly improved in the last few years), Virgin Australia & Qantas could have been capitalising on this and flying into more places in Indonesia than just Bali & a few flights to Jakarta.
The fact that QF doesn’t even do a daily flight to JKT (to my knowledge) from SYD (let alone from MEL) while GA offers direct daily from both to JKT (plus a stack of flights to DPS) shows just how out of touch QF is. I’d imagine all the CBR bureaucrats going to JKT would prefer to fly QF but in a lot of cases they end up flying SQ and having to backtrack via SIN.
I doubt it’s on their radar, but given Lombok has just upgraded its international airport it would be wonderful to see some direct flights in there, as well as into JOG.
Hi Ben
I have been doing some more reading about this. The A320 uses slides from the wings to the ground. The 737 doesn’t have slides. What is supposed to happen is that the pilots should put the flaps down so people can slide down the flaps. In this, and in many other situations, I can’t see this being practical. With a fire in the cockpit, and possibly the hydraulics not working, the flaps were not down in the required position, so that people had to jump, causing serious injuries. The 737 should have slides, at least.
QF just can’t compete with GA given relative staffing costs and I suspect airport costs…
Both fly identically A330s on SYD-CGK GA daily, QF 3/4 times a week. GA fares are much much cheaper, particularly in Business, they have an onboard Indon immigration officer and a fully flat business seat versus QFs sloping SkybedI, GA service is great, only real downside is the wines.
Not much traffic between AU and Indonesia except to Bali. Airlines currently struggle to fill seats to/from Jakarta.
It is a good market to get into (say Jetstar Asia) for travel all over Asia and within Indonesia, but Indonesian government pulled up the drawbrige and has barred access to LCCs to overtly protect its own carriers, in particular Garuda and its subsidiaries.
No level playing field there I am afraid.
I think Australian carriers can make headway in Indonesia the way Mandala and AirAsia have, but it certainly hasn’t been easy, and the experience of those ventures so far means nothing is going to happen quickly.
Lion has at times made noises about being interested in flying Australian domestic routes as extensions of services to Australian cities.
If it comes back with more serious proposals in the context of trade reform Australia should insist on reciprocal opportunities, whether with Lion or a new start with Indonesian equity or another existing Indonesian carrier.
Hi there – I don’t know much about this business. But would have thought Jakarta’s poorly laid out and poorly serviced airport would put paid to it being any sort of hub for anyone but Indonesians.
Any thoughts, Ben?
I don’t think that’s completely true. Just my hunch but I think the combination of strong economic growth, and the need for increased two way business traffic and the clear signs of growth in leisure traffic are going to force infrastructure improvements right through the Indonesian economy. In fact the need to upgrade roads, ferries, rail, ports and airports is going to became a significant driver of vocational training and economic activity. It’s not going to be pretty, but there will be massive changes in the archipelago nation in coming decades, and with our mature markets and aging population there might even be moments when we envy the speed and energy of those changes. (Moments, not periods!)
There could be two reasons for this link that do not apply to Australia:
1. I don’t think we should forget that both the UAE and Indonesia are Muslim countries and that in itself creates a bond between the countries that is similar to Emirates having Dubai – Casablanca services. As a “flag carrier” for the UAE I am sure there are some political objectives required by the Abu Dhabi government. There may also be a burgeoning Haj market as Indonesians grow more prosperous.
2. Indonesia is also becoming a source of cheap labour for rich Muslims who may be more acceptable than Christian Philippinoes or Indians.
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