Aviation

Indonesia’s government plans to merge Garuda with multiple other tourism companies

Garuda Indonesia could soon operate under the same umbrella as several other tourism companies, if a new plan from the Indonesian government gets the green light.

Nikkei Asia reported that the plan has the support of President Joko Widodo, and would see nine state-run companies, like Garuda and low-cost airline Citilink, come together under a holding company.

In addition to the airlines, the holding company would reportedly oversee companies operating in the tourism sector, including Hotel Indonesia Natour, which has 14 properties on Bali and elsewhere.

Alongside this would be companies operating in tourist and World Heritage sites, including Borobudur Temple, and Sarinah, a department store.

According to Nikkei Asia, the hope is that this will allow the companies to eliminate unnecessary costs and work together on initiatives like discount travel packages. With fewer vertical brackets, the outlet reported, travel companies would be able to offer cheaper travel packages.

The move may also make it easier to direct public funds to Garuda Indonesia, which was unprofitable in the first six months of this year.

However, according to Nikkei Asia, observers believe the purpose of setting up the holding company is to shake up Garuda’s management.

The Indonesia government is reportedly planning to provide 8.5 trillion rupiah ($813.17 million) in financial assistance to the holding company. However, many observers reportedly object to a direct infusion of tax money because the government will hold only 60 per cent of the shares.

If it were wholly state-owned, Nikkei Asia reported that there would be a clear public purpose in the efficiency drive and make state aid easier to justify.

Travel Weekly has contacted Garuda Indonesia for comment.


Featured image source: iStock/LIVINUS

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