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SOEs minister plans to merge Pelita Air, Citilink and Garuda to reduce national logistic costs

Tempo - August 22, 2023

Amelia Rahima Sari, Jakarta – SOEs Minister Erick Thohir revealed his plans to reduce national logistic costs, including merging several national airlines.

Erick believed that reducing the national logistic costs will lessen the burden on business sectors. He also urged for efficiency to be the main agenda for state-owned enterprises."SOEs will continue pressing the logistic costs," said Erick during the Indonesia Cafetalk event, quoted from the press release on Tuesday, August 22, 2023.

He gave an example of the merger of four companies into PT Pelabuhan Indonesia (Pelindo), which reduced the logistic costs from 23% to 11%.

"We will try to merge Pelita Air, Citilink, and Garuda to reduce the [logistic] cost," he said.

Erick Thohir said that Garuda has been through the most complex restructuring in Indonesian history. At the time, Pelita Air was being prepared to become the flag carrier if Garuda's restructuring fell through.

Furthermore, Erick mentioned the merger is intended to cover Indonesia's lack of airplanes since Indonesia is short of 200 airplanes compared to the US.

Erick said that the US has 7,200 airplanes for 300 million people with average GDP of US$40,000. Meanwhile, Indonesia has 550 airplanes for 280 million citizens with average GDP of US$4,700. Meaning, Indonesia ideally needs 729 airplanes servicing domestic routes.

Source: https://en.tempo.co/read/1762651/soes-minister-plans-to-merge-pelita-air-citilink-and-garuda-to-reduce-national-logistic-cost