I love Garuda Indonesia, and find that the airline has among the best customer service out there. The national carrier has been struggling financially, unfortunately, as is the case with many mismanaged government owned airlines.
The good news is that the airline has been on the road to recovery (financially). Garuda Indonesia’s CEO (up until earlier this week) was appointed in April 2017, and he has been making some tough decisions for the airline, including significant cost cutting.
For example, the airline recently announced that they’re cutting flights to London. I’m of course sad about that, but it made sense, given that the airline was losing money on the route. Similarly, the airline had announced a while ago that they’d start flying to Los Angeles, but they put that idea on hold, realizing that there’s no way they’d make money operating the route.
The airline has also been trying to cut costs with employees and defer aircraft, realizing that bigger isn’t always better.
Garuda Indonesia’s financial performance has been improving, as the airline “only” reported a net loss of 116 million USD for the first half of the year, compared to 281 million USD in the first half of the prior year.
This week the company held a shareholders’ meeting during which they sacked the CEO, replacing him with the CEO of another state-owned company. They also changed six of the eight people on Garuda Indonesia’s board.
The company’s new CEO is Askara Danadiputra, who is currently the CEO of state-owned seaport operator Pelindo III. He was also Garuda Indonesia’s CFO from December 2014 until April 2016, so at least he has some airline experience.
So, what’s his top priority as the new CEO of Garuda Indonesia? As noted by Asian Nikkei Review:
“The leadership must face the turbulent economic conditions, starting from the depreciated rupiah to rising oil prices. The main focus of the new management is … an increase in employee happiness. Because making the employees happy will improve customer service.”
In principle I like the idea of prioritizing employees, realizing that they’re the key to delivering the experience for customers. However, I do find it somewhat concerning that this is his primary goal, given the situation they’re currently in.
With such a radical change, both with the ousting of the CEO and six of the eight board seats replaced, my guess is that we’ll see Garuda Indonesia going back to some of their old, unprofitable practices. Who knows, as customers that might not be a bad thing, since we might see the London flight resorted, and we might see that flight to Los Angeles actually happen. 😉
It’s clear the government’s goal with the airline (at least at this very moment) isn’t just for the airline to turn a direct profit. I’ll be curious to see how long they stay on this current path, and until they once again decide that the top priority is cost cutting and a return to profitability.
What do you make of this Garuda Indonesia leadership change?
(Tip of the hat to Live and Let’s Fly)