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Jakarta brokers peace between Garuda and Sriwijaya
October 4th 2019
Garuda distances itself from affiliate Sriwijaya following airworthiness concerns. Read More »
Indonesia’s State-Owned Enterprises Ministry has ended a dispute between Garuda Indonesia and its affiliate, Sriwijaya Air, according to the president of Garuda’s LCC, Citilink.
Sriwijaya is expected to resume full operations now Garuda’s MRO arm, Garuda Maintenance Facility (GMF) AeroAsia, will continue to maintain Sriwijaya’s fleet.
GMF withdrew services from Sriwijaya after outstanding payments were not settled. As of June, Sriwijaya owed Garuda US$118 million and GMF $52 million. Its debts extend to unspecified amounts to other suppliers, including oil and gas giant, Pertamina, and airport operators, Angkasa Pura I and Angkasa Pura II.
Included in the truce is Sriwijaya’s LCC, NAM Air. Garuda used Citilink to invest in Sriwijaya and NAM, consolidating Indonesia’s domestic market. The partnership partially led to high profile fare increases. Sriwijaya’s finances improved from consolidation and Garuda’s oversight of its operations. It is majority owned by tycoon Chandra Lie.
Sriwijaya had grounded 18 of its 30 aircraft fleet, reducing daily flights from 245 to 120. The capacity reduction was due to unsatisfactory aircraft condition.
If Sriwijaya had not grounded the aircraft, regulators would have likely done so, a Sriwijaya memo from August, seen by the Straits Times, reported. The memo faulted the airline’s lack of MRO provider, engineers, tools and spare parts. The regulator gave Sriwijaya five days to resolve the situation, and just prior to the peace brokering threatened to ground the entire airline fleet.
Transportation Ministry airworthiness and aircraft operation director, Avirianto, who like many Indonesians goes by only one name, said that since Sriwijaya’s fleet was now guaranteed by GMF, the airline would not be grounded. GMF president, Tazar Marta Kurniawan, said it would have a daily assessment of Sriwijaya's fleet airworthiness.
During the dispute, Garuda ordered its logo to be removed from Sriwijaya aircraft. Garuda’s logo had been applied on the forward fuselage to denote the connection between the two carriers.
“The removal of the Garuda Indonesia logo from planes operated by Sriwijaya Air is part of an effort to protect the Garuda Indonesia Group brand, especially considering the services provided by Sriwijaya Air Group have not been up to our standards since the start of the dispute,” Garuda spokesperson, M. Ikhsan Rosan, said in a statement.
“We’ve decided to remove the Garuda Indonesia logo to ensure that our brand only represents the highest standards of on-flight service and safety.”
