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CHAPTER I

GARUDA INDONESIA

I.1 Garuda Indonesia at glance

Garuda Indonesia is the flag carrier of Indonesia and was founded on 26 January
1946. The name was given by President Soekarno and it is named after the mystical giant
bird Garuda of Hinduism. The headquarters is situated at Soekarno-Hatta International
Airport in Jakarta, which is the capital of Indonesia. Garuda is mostly owned by the
government because most of their shares are held by the government.

Garuda has over 58 destinations which includes both international and domestic
flights. Out of the 58 destinations, 37 of the flights are international over five continents.
Garuda Indonesia expanded its services into Western Europe by joining the Skyteam Airline
Alliance. Other than that, Garuda has seven subsidiaries, which includes PT. Garuda
Indonesia Citilink, a low cost- airline which is targeted for consumers who are not able to
afford their premium price.

Figure I.1a Garuda Indonesia international flight

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Figure I.1b Garuda Indonesia domestic flight route

I.2 Garuda Indonesia to Amsterdam

After a long absence to serve European routes, Garuda Indonesia have been
fly back to Holland since June 1, 2010. The return of Garuda Indonesia to the
Netherlands, marked by several changes / innovations, namely the concept of
"Garuda Indonesia Experience" is the experience and the perceived uniqueness of
Indonesian when someone want to enjoy flight with Garuda from making
reservations, check in, in flight and post flight.Every line of Garuda Indonesia will
also implement a Hail Garuda "in addressing the passengers.Garuda Indonesia
continues to strive for improved services, among others, to meet the timeliness and
provide the best service. In January 2010, Garuda Indonesia received the title "4 star
Airline" from Sky Trax, an independent agency of the world which provide an
assessment of airline service standards.Thus, Garuda has same position with Thai
Airways, Korean Airlines, Japan Airlines, etc. As part of efforts to improve service,
Garuda Indonesia also expect passengers to provide feedback or input on the services
provided by the crew. Input can be provided to counter Garuda Indonesia, crew or
via e-mail.
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Garuda also introduced new uniforms for flight attendants and stewards. The
launch of the new uniforms have been conducted in Jakarta on May 27, 2010 and
would be use at the Garuda return to Europe - the Netherlands. The new uniform
consists of encim Modern kebaya and batik. Uniform was designed by a special
team.

Meanwhile, there were a new food on the plane. Food on the plane for a
flight to Holland specifically formulated by William Wongso. The food in business
class will be presented Rice Tumpeng set course by course in the form of Rijsttafel
without using a plastic tray. The same food will be served also in economy class.
The options provided are Yellow Rice and White Rice and European food choice.

Immigration service on the plane or the "Immigration on Board Servcice"

couldl be one of Garuda Indonesia advantages compared to other airlines. Garuda
Indonesia in cooperation with the Directorate of Immigration will place two
immigration officers on board to provide immigration services to the passengers
directly.

Garuda Indonesia passengers that foreigners can immediately go out through

a special line at the immigration counter at Soekarno - Hatta without having to
queue. Visa fee payment using a voucher that can be purchased at the counter
Garuda at Schiphol Airport. Passengers who do not buy a voucher will undergo the
process of immigration at the airport Soekarno - Hatta as usual
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CHAPTER II

GARUDA INDONESIA TO AMSTERDAM

2.1 SWOT analysis

The SWOT analysis is an assessment of the organization's internal resources and

abilities and the external environment's opportunities and threats. Following is the
SWOT analysis done on Garuda Indonesia.

Internal Environment
1. Strength
Among the strengths that are portrayed by Garuda Indonesia are:
 Good services. Garuda offers one of the best airline services and it can
be proven by the awards that it received in year 2001. Garuda received
the ICSA award (Indonesian Customer Satisfaction Award) in the
category of Best on Time Airline Award from Schiphol International
Airport Amsterdam.
 Good management. Garuda Indonesia also received an award for having
a good management team. Travel Weekly East Magazine, Singapore,
presented Garuda Indonesia Innovators Award 2001 Airline
(International): Crisis Management. An award which is given to
institutions, businesses and individual as an acknowledgement of their
extraordinary achievements.
 Good Finance. Garuda succeeded in completing its debt restructuring
after suffering a hit by the Asian financial crisis. The financial crisis saw
Garuda selling of 20 planes, cancelled orders and even had to lay off
their staff. Due to their good financing skills, they managed to recover
from their debts. Garuda was awarded the " Best Corporate Finance
Deal of the Year 2001 " from Air finance Journal-London on April 8,
2002
 Good Brand. This can be proven by two awards Garuda received which
is from Mark Plus &Co for Experimental & Emotional Branding
Champion, and also in 2002 they received an award from MARS&
Swasembada Magazine for the most valuable brand in airline category.

2. Weakness
Weaknesses of Garuda can be classified into 3 categories
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 Human Resource issues. The auditing company for Garuda found out
that Garuda are over-employed. They have over 9,089 employees and
out of that number, 1,906 of the employees have no clear positions.
 Customer Relationship Problems. Garuda is not yet considered as a big
airline company. There we some customer complaints regarding
Garuda, and most of them complaint on Garuda services especially in
the pilot announcement s and also unexciting lounges for the customers.
 Barriers of Implementation of the strategy. Garuda had problems with
their subsidiaries. Employees from the subsidiaries that refuse to carry
out strategies that were introduced. On May, 2003, it was reported that
641 technicians held protests against the strategy implemented. Still
comes to show that there is no good communication between
management and employee.

External Environment

1. Opportunities
After scanning the external environment, the opportunities that were identified are:
 Customers. Garuda estimated that there will be over 9.7 million potential air
passengers throughout Indonesia. This will give the opportunity for Garuda
to increase their sales.
 Global Airline Industry. Because of the September 11 incident, the airline
industry had a downfall. Sales were declining rapidly as passengers
preferred not to fly as there were concerns about personal safety. This
caused a large number of idled aircrafts. This was an opportunity for
Garuda as the airline industries were selling aircrafts 50% cheaper than it
usually is. Indonesia was able to add aircrafts in their airline at a lower
price.
2. Threats
The threats that were identified for Garuda Indonesia are:
 Competitors. Garuda has either local or international competitors that
operate the same route with them. Examples for local competitors are
Merpati Airlines, Air Asia Indonesia, Bouraq Airlines.
For international competitors are Malaysian Airlines, Air Asia Malaysia,
China Airlines, Korea Airlines, Thai Airways, KLM
 Supply chain. Supply chain is a tight competition nowadays. Since there are
so many new low cost airlines existing, Garuda Indonesia will have to
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compete with these airlines for aircrafts. This new airlines will then offer
new domestic routes using a low price strategy. This will definitely cause
price war in the Indonesia domestic airline.
 Technology Integration. Technology is another threat. Garuda is still using
the old fashioned booking system, whereas the other airlines have already
changed their booking system using the internet. This is a threat as other
airlines are using the digital recording system, and Garuda is still using the
analog recording system.

2.2 Industry analysis

The industry analysis for Garuda Indonesia is done based on Porters 5 forces. This analysis
is 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

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. But in these recent years, low cost airlines have been
blooming, and may be competitors to Garuda in the future.

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.
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4. Bargaining power of supplier

Supplier power in the airline industry is high as there are only a handful of suppliers.
Additionally, aircrafts must be ordered far in advance. The airlines company has
only two primary choices for supply of their jets which is either the Airbus or
Boeing. Due to this reason, the supplier has significant power. The long term nature
of these purchases creates a long-term relationship whereby the airline is often
motivated to purchase the same kind of jets always.

5. Bargaining power of buyers

Bargaining power of buyers is significantly high in the airline industry. This is
because consumers are given the privilege of searching for the lowest flights
available on the internet and to complete the transaction without an intermediary.
Buyer power increases because of this reason.
2.3 7ps
 Product: Flight industry service
 Price: middle to upper class
 Place: Cengkareng (head office)
 Promotion: travel fair, credit card promo
 People: highly proffesional staff
 Process: e-booking, self check in, immigration board service
 Physical evidence: Indonesian ambience and Indonesian food in flight.

2.4 Garuda positioning and differentiation

 POSITIONING
A strong distinguished airline through providing quality services to serve
people around the world with Indonesian hospitality

 DIFFERENTIATION
 Accesibility

To facilitate the growing community of service users Garuda Indonesia, the

national airline opened services center in Senayan City. The service center would
enable customers to purchase tickets Garuda, city check-in, self check in, and special
services for members of the Garuda Frequent Flyer.
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At the center of this service, customers can also get a Garuda Indonesia travel
consulting services to airlines, both domestic and international services Holiday
packages Garuda Indonesia, Garuda Frequent Flier services, as well as other
services. Through integrated service in the middle of the city is not only easier for
passengers, but also reduces the number of queues at counters check-in is available
at Soekarno-Hatta Airport. Thus, passengers can be more relaxed and straight into
the waiting room to get ready on a plane. Senayan City was chosen as the location of
service centers, because the location is very strategic and easily accessible from
various parts.

 Flexibility

Garuda Indonesia, in a corporate with ASYST,developed Indonesia’s Internet

Booking Engine application. Together with Travel Disribution Program, this
application can increase customer’s online reservation performance, flexibility of
researvation, as weel as customer’s revenue. On this corporation, ASYST also
provides infrastrusture to support the apllication. There are some benefit of using
internet booking engine application for Garuda such as

o Maximize online direct sale that delivers funtionality,

fleixibility and performance
o Felxible
o ‘low fare search’ feature
o Reduce cost
o User preferences service such as meal and seat map preference
o User friendly with ‘manage my booking” feature
o Multi currency availability
 Privilege

GI has a frequent flyer program in order to appreciate its value and loyal
customer.It also known as Grauda Frequent Flyer( GFF). As a GFF member, each
trip with Garuda Indonesia also becomes a chance to earn miles, which can be
redeemed later for an Award Ticket or Upgrade Award. Better still, member can give
the Award Ticket or Upgrade Award to family members or colleagues. In addition, a
GFF membership also lets member enjoy exclusive privileges according to
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membership level, such as special check-in counters, extra baggage allowance and
access to Garuda Indonesia airport lounges.
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CHAPTER III

ANALYSIS

3.1 Garuda Indonesia positioning segment

3.1.1 Inbound

INBOUND DESTINATIONS (From Netherlands come to Indonesia)

1. BUSINESS PERSONS

Nowadays, there many Dutch people come to Indonesia to do Business activities in

Indonesia. For instance, there are some big companies from Netherlands do some
Investment in Indonesia or Foreign Direct Investment in Indonesia. So the
representative of the company will come and visit Indonesia to do some observation,
meeting, and other business activities. The examples of Netherlands company have
some investment in Indonesia are ABN Amro, TNT, Shell and Uniliver.

2. TRAVELERS

There are a lot of Dutch people come to Indonesia, especially for Holiday in Bali.
Besides that, Garuda also can promote other side of tourism destinations in
Indonesia, such as raja ampat, malang, komodo island, and etc.

3. FAMILY MATER

It is because of the History between Indonesia and Netherland. For instance, there
are many Indonesian stay and leave in Netherlands, sometimes every holiday or
Lebaran time, Indonesian will go back to Indonesia to celebrate Lebaran.

3.1.2 Outbound
1. BUSINESS PERSONS

In this era, there are a lot of Indonesian citizens who went to the Netherland to work
and study. Until now there are lots of businessmen from Indonesia who opened their
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companies overseas, one of the examples is Padang Food restaurant. For instance,
Salero Minang in Den Haag City.

2. TARVELERS

Mostly for Indonesian travelers, when they do traveling to Europe they will visit
Amsterdam, Netherlands. After that, they will move to other city or country such as
Paris in France, Berlin in German, and Rome and Milan in Italy.

3. FAMILY MATER

As many people know, that Indonesia have history with Netherlands, so there are
many Indonesian stay and leave in Netherlands, sometimes for Indonesia who have
family in Netherlands, during school or work holiday, they will visit their family in
Netherlands.

4. STUDENTS

Nowadays, there many Indonesian go to Netherlands for study and some of the
famous major in Netherlands are Law, Business, and Information Systems. Besides
that, some of the University in Netherlands are using English as basic language
during studying period as a main language.

3.2 Garuda Indonesia marketing mix strategy

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3.3 Perceptual map

price

Service quality

Figure 3.3a perceptual map based on price on September18,2012 Tuesday , and food quality

CGK-AMS / economy class / September 18, 2012, Tuesday

Airlines price ($)

KLM 1,366

Singapore Airlines 1,646

GARUDA INDONESIA 1,754

Emirates 1,456

Table 3.3a price list of Garuda Indonesia from JKT to AMS on September 18,2012
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The perceptual map will define the positioning of Garuda Indonesia competes with
other competitor. We assume that we are gonna travel on Spetember 18, 2012 The reason
why group picks that date is because it’s on Tuesday which means that price of the ticket
will be lower than weekend. Moreover, that day is not a peak season for Indonesia travellers
because it is not a holiday season (school ).

Group compares based on price and customer service quality review on

skytrax.com. That website enables customers to giva review regarding thoer expereinced
using the airline. Customer service quality that being compared consists of catering, and
staff service.

Airlines Customer’s service review

Garuda Indonesia 8.5 out of 10
Emirates 5.8 out of 10
KLM 6 out of 10
Singapore Airlines 9 out of 10
Table 3.3 b Airline customer’s review service quality
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Bibliography
Adiwidjaya, A. S. (2010). Satelite.com. Retrieved May 20, 2012, from Garuda Indonesia
kemabali terbang ke Den Haag.

Asyst.com. (2012). Retrieved June 10, 2012, from

http://www.asyst.co.id/en/news/newibe.asyst

Pusat pengelola Kawasan Bung Karno. (2011, March 10). Retrieved June 10, 2012, from
http://www.gelorabungkarno.co.id/news/general/garuda-indonesia-buka-pusat-
pelayanan-di-senayan-city/

Skytrax. (n.d.). Retrieved June 10, 2012, from

http://www.airlinequality.com/Forum/garuda.htm

Skytrax. (n.d.). Retrieved June 10, 2012, from

http://www.airlinequality.com/Forum/klm.htm

Skytrax. (n.d.). Retrieved June 10, 2012, from

http://www.airlinequality.com/Forum/emrts.htm

Skytrax. (n.d.). Retrieved June 10, 2012, from

http://www.airlinequality.com/Airlines/SQ.htm