Professional Documents
Culture Documents
Garuda Indonesia Marketing MBA
Garuda Indonesia Marketing MBA
Garuda Indonesia Marketing MBA
Syndicate 6
Melisa
29114346
29114400
29114440
Muhammad Bintang
29114450
MBA-ITB
School of Business and Management
Bandung
2015
CHAPTER I
INTRODUCTION
The first commercial flight from Calcutta to Rangoon was made on January
26, 1949, using a Douglas DC-3 Dakota aircraft with the tail number of RI 001
and the name Indonesian Airways. In the same year, on December 28, 1949,
another DC-3 aircraft registered as PK-DPD with the logo Garuda Indonesian
Airways on its fuselage flew from Jakarta to Yogyakarta to pick up President
Soekarno. This was the first flight made under the brand of Garuda Indonesian
Airways.A year later, in 1950, Garuda Indonesia was officially established as a
State Corporation. During that period, the company operated a fleet of 38 aircraft
comprising 22 DC-3 aircraft, 8 Catalina flying boats, and 8 Convair 240 aircraft.
The fleet continued to grow, and Garuda Indonesia made its first flight to
Mecca carrying Indonesian hajj pilgrims in 1956. Flight routes by Garuda
Indonesia to European countries started in 1965 with Amsterdam as the final
destination. Throughout the 80s, Garuda Indonesia underwent large-scale
restructuring for its fleet and operations. It was at these times that the company
begun to develop comprehensive training programs for its air and ground crews
and established a dedicated training facility in West Jakarta, named the Garuda
Indonesia Training Center. The Company also built an Aircraft Maintenance
Center at Soekarno-Hatta International Airport.
In the early 90s, Garuda Indonesia developed a long-term growth strategy
which was applied until the year 2000. The company continued to expand its fleet
and Garuda Indonesia also ranked among the 30 largest airlines of the world.
Alongside initiatives in business development, a new management team
took office early in 2005, and new plans were formulated for the future Garuda
Indonesia.
The
new
management
of
Garuda
Indonesia
undertook
CHAPTER II
ISSUES & RECOMMENDATION
2.1. Issues
Garuda Indonesia is preparing for expansion with enhancing service, which is
increasing frequencies and destination in anticipation of joining the SkyTeam and
ASEAN Skies. They plans to increase they fleet between 2015 2025. By now,
Garuda has 110 aircraft with various type of aircraft. They have secured $200
million from banks to fund expansion and they aim to raise $163 million. In 2014
they plans to allocate $325 million in capital expenditure for business expansion.
In October, they obtained $1.7 billion loan from ICBC to leasing back six Airbus
320s which will be operated by Citilink and
mainline fleet. Garuda plans to expand their flight to North Asia and delayed five
time-a-week flight to London due to PCN of the runway at the Jakarta still not
meet the requirement of PCN for operating a full-capacity 777-300ER, while
service to Amsterdam is planned for 2015. For the regional services, Garuda is
enhancing itself by the delivery 2 of 25 ATR72-600s. But now Garuda has to face
the challenges with a plugging rupiahs rate to US dollar which is exceed
Rp12.000 in January. However, now Garuda is transitioned well from banned
airline into a best Indonesian Carrier. Problem for Garuda Indonesia to expand
their service is the infrastructure for the airport is not in the pace of market
growing.
But immediately Garuda is announce a cancellation for opening of new two
international routes, which is to Manila or Mumbai. The company suffered from
increasing losses during the first half of the year. Rupiah depreciating and the fuel
price was increasing. Garuda had to cope with increasing operational cost, which
is 40% used to pay fuel. And Garudas revenue, 0.7%, is inferior than its expense
which climbed 15%. So with that current condition, Garuda is delaying expansion
plans. Even Garuda has to close the Taipei route for efficiency.
2.2. Analysis
2.2.1. Marketing Plan of Garuda Indonesia
The market segmentation, targeting, and positioning (STP) process is a
fundamental concept understanding marketing and the strategies of firms.
Segmentation & Targeting
Garuda Indonesia serves Indonesias fast-expanding middle-upper class,
medium to high value customer. Many wealthy Indonesians insist on flying first
class. Garuda Indonesia decides to target customer in business and leisure
segment, grabbing the middle upper section of the market.
Positioning
Garuda Indonesia positioned itself as full service airplane offering premium
quality of service, indulging passengers five senses.
(http://www.traveloka.com/fullsearch?ap=BDO.DPS&dt=09-032015.NA&ps=1.0.0)
Place
To deliver the services, Garuda Indonesia were developed 2 main
channels distribution, direct channel and indirect channel. Direct channel
consisted of Call Center, Sales Office & Ticketing Office, Website, Garuda
Online Sales (GOS), Bilateral Interline Traffic Management (BITA), and
Multilateral Interline Business Travel Agreement (MIBA), and Mobile
Product
Service is a core business of Garuda Indonesia. Garuda Indonesia has
launched a service concept called "Garuda Indonesia Experience". This
service offers a concept reflects the genuine hospitality of Indonesian and
presents the best aspects of Indonesia to the passengers. They offers
passengers a distinctive service concept ingrained with Indonesian hospitality
and all the best that the country has to offer. This is prove by The Gold
Awards from The Pacific Asia Travel Association (PATA).
Garuda Indonesia Experience refers to "5 senses" (sight, sound, scent,
taste, and touch) and includes a 28 "customer touch points" services ranging
from pre-journey, pre- flight, in-flight, post-flight and post-Journey. This
section can provide cost advantages to improve switching so that consumers
think twice or difficult to switch to another service product.
The 5 senses will explain as follows. First, Sight concept offers the
beauty of Indonesia that can be found at new aircrafts interior design which
combined natural colors and Indonesian exquisite traditional motives. This
concept is also reflected on the attractive colors of cabin crews uniform.
Second, Sound. Music and traditional instruments is mirror of diversity of
ethnic groups and cultures in Indonesia. Passengers can enjoy it through
sophisticated entertainment device in the First Class, Business Class and
Economy flight. Cutting edge Audio and Video On Demand (AVOD) device
offers a variety of options to enjoy the entertainment, including traditional
Promotion
Garuda Indonesia has a promotion program called GarudaMiles is a
promotion program based on membership service that is given as a token of
appreciation for loyal customers Garuda Indonesia. the accumulated miles
can then be redeemed for Award Tickets to desired destinations or Upgrade
Awards from Economy to Business Class on chosen flights. GarudaMiles
member also can enjoy special benefits such as: special check-in counters at
the airport, extra baggage allowance, priority baggage handling, priority
waitlist on ticket reservations, access to Garuda Indonesia airport lounges,
and great offers from partners of Garuda Indonesia worldwide. By September
2014, members of GarudaMiles currently reaches approximately 750,000
members. Besides flight activity of the members of this GarudaMiles
contribute to traffic by 30%, which continued to increase compared to
previous years. Other promotion program is credit card promotion such BNI
and CitiBank.
Garuda have to be creative to promote their brand. To increase brand
awareness of the international community against Garuda Indonesia. they has
People
Garuda has high quality human resources and well-trained employees. To
provide the customers with high quality of services as one of marketing stategy,
Garuda hired high quality peoples to give their best performance to run the
business process.
SDM sangat krusial. Kita bisa punya strategic plan yang bagus, investasi
barang-barang bagus,tapi pada akhirnya itu semua dijalankan oleh Manusia. Jadi
di Garuda kami menginginkan SDM yang tangguh (Emirsyah Satar - Ex
President Director of Garuda Indonesia)
Process
To facilitate customers to use the services of Garuda, they provide
convenience in the use of their services such as e-booking, self check-in and
immigration board service.
Physical Evidence
To strengthen their image as an Indonesian airline, Garuda provide
Indonesian ambience and Indonesian food in flight
2.2.3. Porters Five Forces
The industry analysis for Garuda Indonesia is done based on Porters 5 forces.
This analysisis done to show how Garuda is surviving or competing in the
industry compared to the other airlines. The 5 Porters forces that are examined
are:
1. Competitive rivalry within an industry
Garuda has a high level of competition within the industry. Garuda
experienced relentless price competition at home form nearly tow dozen domestic
airlines. However, Garuda still controlled 50 percent of the domestic market. The
numbers continued to drop after the worldwide travel industry suffered from
bombings in Bali, SARS epidemic and also wars that occurred in Iraq. Their
principal competitors are Lion Air, Singapore Airlines, Thai Airways, and
Malaysian Airline System. All of them are competing against each other to
provide the best airline services to the customers.
2. Threat of new entrants
Threat of new entrants of this industry is low because the barriers for new
entry in industry airline is high. The airline industry is an industry that requires a
large upfront amount of investment, therefore threat of new entrants can be
considered to be moderate. Besides large amount of investments, tight regulations
also make it hard for new entrants to enter the industry.
3. Threat of Substitutes
The threat of substitutes in the airline industry is very low. With no high-speed
train systems in Indonesia, the threat of substitutes has always been low.
Travelling with other means of transportation is significantly longer than by air
while the price difference to the consumer is not issue. The routes of other
transportation systems also put this substitute for air travel at a disadvantage.
4. Bargaining power of supplier
Bargaining power of supplier for Garuda Indonesia is low because Garuda
Indonesia group consists of Strategic Business Unit (SBU) and Subsidiaries. The
SBUs are Garuda Cargo and Garuda Medical Center. The subsidiaries are PT
Citilink Indonesia as Low Cost Carrier (LCC); PT Aerowisata (hotel, ground
transportation, travel agent and catering); PT Abacus Distribution Systems
Indonesia (global distribution system); PT Aero System Indonesia/Asyst
(provider of IT services for the travel and transportation industry), and PT Garuda
Maintenance Facility or known as GMF AeroAsia (aircraft maintenance, repair,
and overhaul).
Despite of fuel price makes Garuda Indonesia suffer for profit loss, Garuda
Indonesia can control another cost because its Strategic Business Unit (SBU) and
Subsidiaries.
more than long haul. Short haul mean people are travel in regional
around the country.
b. Weakness
Finance (Profit Loss). With a weaker rupiah and an increase in fuel
prices, Garuda had to cope with increasing operational costs, of which 40
percent was used to pay for fuel, he said.The firms financial report released
last week showed that Garudas revenue rose 0.7 percent to $1.74 billion this
half, while its expenses, which include flight operations, climbed 15 percent to
$1.96 billion.During the first half of this year, the airline booked $12.86
million in losses from currency exchange, while in the same period last year
the firm was still posting profits of $1.4 million from it.
Less number of pilot. As we know Garuda is a big company on
Airlines Industry yet Garuda lacks of pilot. They have less number of pilot
because they have a high standard qualification for their pilots. So it becomes
hard to find the good ones.
c. Opportunities
Indonesians Large Population & Geography. Indonesia has large of
population and Indonesia is not a poor country. The Geography of Indonesia is
so complex, there are so many provinces in Indonesia. This will gave the
opportunity for Garuda to increase their sales.
International Expansion Routes. Wide network of Garuda Indonesia is
an opportunity to expansion the International market. So it could increase their
sales.
d. Threat
Competitors. For domestic route, Garuda Indonesia has some
competitors but the airline that has a same propose as premium service are
Garuda Indonesia and Batik Air. Batik Air is one of competitor of Garuda
Indonesia for domestic route because they have same positioning as full
service premium airline. For Asean Route, Air Asia is one of competitor for
Garuda Indonesia because Air Asias rate is lower than Garuda Indoenesia.
Fuel Price. The price of fuel is very volatile and Garuda Indonesia can
not adjust its price frequently as the fuel price changes.
Currency. Garuda buy the fuel in dollars currency so when rupiah
becomes weak Garuda has to buy the fuel at the higher price.
Indonesian Market. The main target of Garuda is Indonesian people, so
the market its very depending on Indonesian people buying power.
c. Recommendation
Internal
External
OPPORTUNITY
- Indonesian's Large Population &
Geography
- International Expansion
STRENGTH
- Good Services
- Good Management
- Good Brand
- Good Pilot
- Enhance cooperation w/
International Airways for
International Expansion
WEAKNESS
- Less Number of Pilot
- Finance (Loss)
- Citilink
- Adding More SBU (Fuel)
- Garuda Indonesia Experience
Source :
https://www.garuda-indonesia.com/jp/en/investor-relations/about-garudaindonesia/corporate-profile/history/index.page?
https://www.garuda-indonesia.com/jp/en/investor-relations/about-garudaindonesia/corporate-profile/index.page?
http://www.traveloka.com/fullsearch?ap=BDO.DPS&dt=09-032015.NA&ps=1.0.0
http://www.ainonline.com/aviation-news/air-transport/2014-02-12/garudaprepares-expansion
CASE STUDY I
prepares-expansion
As Indonesias national carrier Garuda initiates efforts to enhance service through
increased frequencies and destinations, in anticipation of its move to join the
SkyTeam global alliance in March and the ASEAN Open Skies in 2015, it is looking
at adding around 200 to 250 aircraft to its fleet between 2015 and 2025.
The carrier, which is to soon finalize its plans for a mix of narrow- and widebody
aircraft, is expected to seek board approval this year to increase its fleet to 350 to 400
from its present 133 by 2025, CEO Emirsyah Satar told Reuters in Hong Kong.
Garuda has 110 aircraft on order, including 50 Airbus A320neos and Classics, 17
Airbus A330-300s, 25 ATR72-600 turboprops, plus six each of the Boeing 777ER and
CRJ-1000NG regional jet. By the end of this year, it expects to have a fleet of 128, up
from its present 110.
The airline has secured $200 million in loans from banks to fund expansion of its
fleet. Plans to conduct a rights issue in this years first quarter, with an aim to raise
$163 million, have already been approved by shareholders. For 2014, it plans to
allocate $325 million in capital expenditure for business expansion. About half of this
amount should originate from funds generated through the rights issue, according to
a report by private equity firm Indonesia Investments.
Garuda obtained a $1.7 billion loan from Industrial and Commercial Bank of China
(ICBC) in October, with the airline selling and leasing back from ICBC six Airbus
320s, which will be operated by its budget subsidiary Citilinktaking that carriers
fleet to 32 by year-endplus five Boeing 777-300ERs for its mainline fleet.
Capacity expansion to North Asia will be made mainly with the new 777-300ERs.
Plans to start a five-times-a-week service to London in November were delayed due
to the pavement classification number (PCN) of the runway at Jakartas SoekarnoHatta Airport with a 120-ton PCN as against the 132-ton PCN required for operating a
full-capacity 777-300ER. To make that flight, Garuda will still need a restricted
takeoff weight and a reduction of 39 passengers and cargo. Service to Amsterdam is
CASE STUDY II
expansion-plans-amid-loss.html
SkyTeam earlier this year, Garuda has improved its connectivity, he said. Therefore,
even though we have a plan to close the Taipei route we will sign a code share
agreement with China Airlines [a member of SkyTeam], so we can still fly our
passengers from Jakarta to Taipei, he added, explaining that the daily routes load
factor was only around 50 to 60 percent.