A Stronger Link
    Category: Rightsizing the SOEs By : Ulisari Eslita Read : 793 Date : Tuesday, August 06, 2013 - 07:01:39

    Ahmad Zamroni / Forbes Indonesia

    Indonesian budget carrier PT Citilink Indonesia, a unit of state-owned carrier PT Garuda Indonesia, is finally emerging from under the shadow of its larger parent. Founded in 2001, the airline had only nine planes in 2011 after a decade of flying and was a loss-maker for Garuda. Today under Chief Executive Arif Wibowo the airline is revamping itself to become a serious contender as a low cost carrier (LCC), putting it in direct competition with Lion Air, which owns about half the market in the country.

    From those nine planes two years ago, Arif now plans to expand to 50 planes by 2015, along with raising passengers flown from 2.9 million last year to 16.4 million.

    Currently, the competition among LCCs is very intense with Lion Air, Air Asia and others chasing a booming market of travelers who can now afford budget air travel. “Indonesia's GDP per capita is $3,500 now. It still has exponential growth until it hits the $10,000 mark,” says Arif. In the near future, the LCC business will be more interesting as the ASEAN open sky policy will become effective in 2015, he notes: “It will make the competition even more intense.”

    Citilink, which was spun off from Garuda last year, is not planning to be profitable this year. Its focus instead is to build market share so it has enough traffic to become profitable. Last year, the company posted a $28.4 million loss on $73.4 million in revenue, and has about 17% market share in Indonesia by passengers flown and is aiming for 19% by yearend, as Citilink will add two more Airbus A-320s by December.

    To gain market share, Citilink is rejuvenating its fleet. In 2010, Citilink had just eight planes, but gained another 12 from Garuda last year. It will get another three by year's end. “So we will have a total of 24 planes in the fleet by the end of this year with the fleet's average age below one year,” says Arif. Adding all those planes means Arif has little time to sleep. Almost every day, Citilink headquarters is full of applicants to be pilots and cabin crews. Arif is a Garuda veteran, joining in 1990 as a maintenance engineer. Before being appointed as chief executive in 2012, Arif served as the executive vice president of sales and marketing at Garuda and has degrees in mechanical engineering and air transportation.

    Known for flying domestic routes, Citilink will now add its first two international flights by the end of the year, Jakarta-Singapore and Jakarta-Kuala Lumpur. (Both routes are the biggest in terms of traffic in the Southeast Asia.) “Actually, we're planning to fly around the region by early 2014,” says Arif.