The logical gaps in the article are that:
1. GA don’t have the domestic presence and dominance across the archipelago they used to.
2. They’re more expensive than everyone else in the domestic market.
I just don’t see how they’re going to succeed with their domestic focus plan!
Lion Air group are massive and appear to have about ten times the number of routes of GA. I know this as I’ve flown a couple of times domestically this year and planned other trips, and every time I try to use GA, or Citilink (QG), but it’s difficult. GA might have one flight a day if they serve the city; Lion group will have five or six flights… I will not fly on Indonesia Air Asia, or the new Super Air Jet, and try to avoid Lion group whenever possible as they’re too unreliable. GA have very significant competition.
The other factor is their price. I flew PKU-CGK on GA last week, a domestic sector of about 90 minutes. Flights on most of the carriers were about AUD140. GA was 190, which I was happy to pay for what I perceive as a safer organisation and definitely a more reliable one, but I’m not sure most people in Indonesia could or would, do the same. Sure there is a middle class of about 25 million people in this country, so there is a market for people who can afford to pay more for better quality, but it appears most are happy to pay for the cheaper ticket.
Personally, I would have thought that targeting the international market would have given them more of a difference from the plethora of more domestic focussed LCCs, but clearly not.
Then there’s the issue of how much of the graft and corruption has been cleared out to get their costs under control? And how much of the cost problem is based on dodgy long term contracts they can’t escape from?
Good luck GA. I think you’re going to need it.
www.bloomberg.com
