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Garuda Indonesia SWOT & PESTLE Analysis

Last Updated : 16 May, 2017

OVERVIEW

Name of the Company: Garuda Indonesia

Business Sector: Aviation

Operating Geography: Asia, Indonesia, Global

About the Company: Garuda Indonesia was established in 1947 as KLM Interinsulair Bedrijf and is the national airline of Indonesia. It is one of the leading global airlines and serves more than 130 domestic and international destinations. Headquartered in Jakarta, Indonesia; Garuda had 20,000 employees as of 2016. Its subsidiaries include Aerowisata, Citilink and GMF AeroAsia.

Revenue: US$ 3,863.9 million – FY ending 31st Dec 2016

SWOT & PESTLE Analysis

The SWOT analysis for Garuda Indonesia is presented below:
Strengths
Weaknesses
1. Flag carrier of Indonesia with government backing
2. Garuda awarded “Indonesia Most Admired Companies” for eight consecutive years and also attained 5-Star airline status
3. Increase in flight network, joining SkyTeam alliance and focus on cargo business driving growth
1. Lawsuit regarding gender discrimination in retirement age for stewardesses by Garuda may incur penalties for the carrier
2. Citilink, Garuda’s LCC (low cost carrier) financial performance straining the group
Opportunities
Threats
1. Garuda’s shift towards digital sales channels and growing reengineered cargo business offers immense potential.
2. Indonesia being the most populous among ASEAN nations and fourth globally presents a lucrative aviation market for Garuda
3. “Excellent Indonesian Hospitality” service by Garuda to improve customer experience
1. Domestic political turbulence and rise in extremism major threat that could affect Indonesian economy thus impacting Garuda’s prospects.
2. Excessive competition with regards to pricing among key competitors of Garuda may threaten both yields and load factors
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References

1. Garuda Annual Report 2016: https://www.garuda-indonesia.com/files/pdf/investor-relations/report/2016.pdf

2. Garuda Investor Presentations: https://www.garuda-indonesia.com/id/en/investor-relations/financial-report-and-presentations/company-presentation/index.page?

3. Garuda Indonesia signs with Sabre for end-to-end Operations and Crew Technology Platform to support growth strategy: https://www.sabre.com/insights/releases/garuda-indonesia-signs-with-sabre-for-end-to-end-operations-and-crew-technology-platform-to-support-growth-strategy/

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The PESTLE analysis for Garuda Indonesia is presented below:
Political
Economical
1. Being majorly owned by Indonesian government, Garuda enjoys strong backing.
2. Domestic political turbulence is the single biggest risk that could affect Indonesia and its economy in the coming years, thus impacting Garuda’s prospects
1. Economic fundamentals favour Garuda; GDP growth of 4.9% and air travel growth of 11% in Indonesia.
2. Indonesia being the most populous among ASEAN nations and fourth globally presents a lucrative aviation market for Garuda
3. Tourism is expected to increase significantly in the next four years which will be a booster Garuda
Social
Technological
1. Indonesia being an archipelago has an air traffic penetration of just 33%, thus there is significant upside oppurtunity
2. Indonesia is a growing economy wth increase in average disposable income of an average of 5% annually, which is expected to boost air travel
1. Implementation of mobility and analytics intiatives across the business units at Garuda airlines will result in efficiency and increased customer satisfaction.
2. Implementation of e-auction has made procurement seamless and efficient and Garuda is able to keep the inventory cost at minimum
3. Tie up with Sabre Airline Solutions platform will strengthen Garuda’s aircraft tracking, disruption control and prevention and crew operations.
Legal
Environmental
1. Ongoing lawsuit regarding gender discrimination in retirement age for stewardesses by Garuda may incur penalties1. Garuda Indonesia focuses its environment sustainability strategy on the three plillars, People, Planet, and Profit.
2. Increased use of alternative/renewable sources of energy by Garuda to reduce Carbon footprint.
3. Frequent natural catastrophes in Indonesia may subdue the economic growth
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References

1. Garuda Annual Report 2016: https://www.garuda-indonesia.com/files/pdf/investor-relations/report/2016.pdf

2. Garuda Investor Presentations: https://www.garuda-indonesia.com/id/en/investor-relations/financial-report-and-presentations/company-presentation/index.page?

3. Garuda Indonesia signs with Sabre for end-to-end Operations and Crew Technology Platform to support growth strategy: https://www.sabre.com/insights/releases/garuda-indonesia-signs-with-sabre-for-end-to-end-operations-and-crew-technology-platform-to-support-growth-strategy/

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Copyright

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