Garuda Indonesia SWOT and PESTLE Analysis

Strength

1. Geographic location and tourism attraction: Due to its exclusive geographic location, being the world's largest archipelago, stretching for more than 3,100 miles and comprising a series of more than 17,508 Southeast Asian islands, including Bali and Java, there was an exigent need for an efficient air travel industry in Indonesia, which is very vital to its growing economy. In Indonesia, road transport cannot be a substantive substitute for air travel as Indonesia comprises of islands. Over 6,000 of the islands are inhabited by a diverse ethnic population numbering over 170 million, and Garuda has played the role of a life line for the island country. In addition, Garuda's institution of international flight destinations can be by and large attributed for developing the national tourism industry since the 1980s, when Indonesia had begun shifting its rivet away from the petroleum trade after the oil glut of that decade and was focusing its energies on the hospitality sector patronizing tourism as an alternative source of revenue generation. Besides, the aggressive promotion of tourism by the Indonesian government acts as both a strength and opportunity for Garuda.

2. Flag carrier of Indonesia with strong government backing: Garuda has an integrated global network of air and ground services which is one of the best in class. It comes only second to Lion Air when competing amongst the largest airlines of Indonesia and runs scheduled flights to a number of destinations in Southeast Asia, East Asia, South Asia, the Middle East, Australia and Europe from its main hub in Jakarta, Soekarno–Hatta International Airport, as well as services to Australia and Asia from Ngurah Rai International Airport (Bali), besides operating a large domestic fleet from both Sultan Hasanuddin International Airport (Makassar) and Kualanamu International Airport (Medan). It is the largest airline in Southeast Asia and one of the largest in the Southern Hemisphere, ferrying over 16,000 commuters daily to a booming list of 16 domestic and 28 international locales. Through subsidiaries such as Merpati Nusantara Airlines, PT Aero Catering, PT Satriavi Tours and Travel, and Aerowisata Hotels, Garuda has extended its reach into airline food services, accommodations, and tourism.

3. Steady revenue contributed by Hajj passengers: One of the most pivotal air services the carrier offered each year was flights during Hajj, the annual Muslim pilgrimage to Mecca. In recent years, the quota for pilgrims hailing from Indonesia and Malaysia has swelled substantially post the Grand Mosque’s renovations. The Saudi government in fiscal 2018 permitted 221,000 pilgrims from Indonesia, up from 168,000 the previous year. Indonesia is home to the largest Islamic population on the globe and Garuda took pride in carrying 221,000 Hajj pilgrims from the island country which accounted for some 3.91 percent of its total operating revenue. According to Aviation Week & Space Technology, Hajj flights--which take place during a compressed two-month period determined by the Muslim calendar—did contribute to about 10 percent of the company's annual revenues in the early 2000s. Scheduled as frequently as every hour, flights to Mecca were full on arrival and empty on the return flight; after the pilgrimage, the pattern was reversed. Umrah is another pilgrimage undertaken by the Muslims but is spread more throughout the year and drives constant traffic. Garuda needs to liaise with the Umrah travel agent to divert those travelling from Malaysia to fly Garuda. One of the main competitors are Air Asia and Saudi Airlines. Garuda might consider having flights to Jeddah from Surabaya and Aceh.

4. Aircraft with a young fleet and potent brand power: Garuda Indonesia Group currently operates 202 aircraft with an average age less than five years. This amount is accommodated by Garuda Indonesia as a main brand with a total of 144 aircraft, and Citilink as a Low-Cost Carrier Airline which operates 58 fleet aircraft. The achievement of Garuda Indonesia’s transformation program can be seen from global recognition a Skytrax’s 5-star airline rating since 2014 to 2018 consecutively, ranked as Top 10 Worlds Best airline in the world, as well as winning the prestigious “The World’s Best Cabin Crew” award for five consecutive years from 2014. To complement the Skytrax Awards, Garuda Indonesia also awarded the "5-Stars Airline" recognition from the Airline Passenger Experience Association (APEX), a non-profit association for enhanced passenger flight experience based in New York, USA. Garuda’s passenger volume has seen a steady rise ferrying 3844 million passengers in 2018, 3624 mn in 2017 and 3500 mn in 2016. Fleet utilization stood at 9.37 (2018) in hours, 9.36 and 8.58 in hours in fiscal 2017 and 2016 respectively. Cargo carried has also seen an upward trend touching 45378 thousand ton (2018), 44676 and 41582 thousand tons in fiscal 2017 and 2016 respectively. Total Fleet size of Garuda Indonesia Group stands at 252 in 2019.

The remaining section of “Strength” is available only in the 'Complete Report' on purchase.

Weakness

Opportunity

This section is available only in the 'Complete Report' on purchase.

Threat

This section is available only in the 'Complete Report' on purchase.

Political

This section is available only in the 'Complete Report' on purchase.

Economic

1. Economic fundamentals posing a challenging business environment for Garuda: 2019 is likely to see no improvement in Indonesia's economy owing to an ongoing trade war between China and the US, Indonesia’s two trading partners. The continuing depreciation of the country’s currency, Rupiah is also negatively affecting the economy. In order to overcome this, the country is increasingly banking on tourism as a means of supporting growth and balancing the loss of revenues resulting from lessening exports.

2. Indonesia being the most populous among ASEAN nations presents a lucrative aviation market: The ASEAN countries, which include Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, are likely to become the fourth-largest economy in the world by 2050 according to McKinsey forecasts. This growth will benefit related industries like aircraft MRO services, training, ground handling services, cargo, and travel industry. Garuda will also reap the benefits of the growth of the Indonesian aviation industry.

3. Tourism is expected to increase significantly by 2035 which will be a booster Garuda: A study by Boeing has revealed that the middle class is the biggest growth booster of budget airlines in the Asia-Pacific region owing to an increased need for connectivity in the archipelago as well as increased tourism. With the middle class estimated to double in the region by 2035, and Indonesia continuing its remarkable progress in the aviation industry with forecasts estimating that it will be the 4th largest aviation industry globally by 2030; Garuda has a good opportunity to boost the popularity of its low-cost subsidiary Citilink.

Social

This section is available only in the 'Complete Report' on purchase.

Technological

This section is available only in the 'Complete Report' on purchase.

Legal

This section is available only in the 'Complete Report' on purchase.

Environmental

This section is available only in the 'Complete Report' on purchase.