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Image: Garuda Indonesia

Garuda cuts Europe flights as domestic routes become unprofitable

The Indonesian national carrier has adjusted its schedules for routes to London, Amsterdam and Singapore.

Garuda Indonesia has axed a number of international and domestic routes, which the Indonesian national carrier blamed on the government’s revised regulations on ceiling fares for domestic routes, making them unprofitable.

The airline has stopped its Belitung-Singapore service, which began only in October 2018, and will do the same to Jakarta-London-Bali, which relaunched barely six months ago, after the summer peak season, chief executive I Gusti Ngurah Askhara Danadiputra said at a parliamentary hearing last week, TTG Asia reports.

Frequencies on the airline’s Jakarta-Amsterdam service, meanwhile, will be cut from six to three times weekly later this year. Domestically, frequencies to destinations like Morotai, Maumere and Bima will also be cut.

Efficiency measures
The cuts are being made as efficiency measures, following the Indonesian government’s decision to lower the ceiling price for economy-class fares by 12% to 16%, effective since May 15.

“The impact of the ceiling price reduction is great. Garuda can no longer subsidise loss-making routes,” the CEO said.

The Indonesia Ministry of Transportation issued a new regulation in mid-May requiring airlines to readjust the cost of economy fares on domestic routes to a new airfare ceiling.

The policy was made to meet the domestic market’s demand for affordable tickets ahead of the upcoming annual mass homebound exodus around the Eid al-Fitr holiday period, known locally as Idul Fitri. But ticket prices remain high despite the regulation, and several flights have been cancelled due to a lack of passengers, TTG Asia writes.

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