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Garuda Drops Bali as a Secondary Hub

ASITA Bali Chairman Says Decision to Drop Bali as a Hub is Now 99.9% Certain.


Bali News: Garuda Drops Bali as a Secondary Hub
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(10/28/2006)

As reported on balidiscovery.com [Garuda to Abandon Bali as a Secondary Air Hub], Garuda Indonesia has apparently confirmed that Bali will be dropped as a secondary hub commencing from the start of its Summer Schedule for the Southern hemisphere.

Confirmation of the decision by the national carrier to re-centralize its operation to a single Jakarta-base was reported to colleagues in the Bali travel industry by Al Purwa, Chairman of the Bali chapter of the Association of Indonesian Travel Agents (ASITA), following a meeting last week with a member of Garuda's management team.

In explaining the reasons given by Garuda, Purwa reported:

Garuda claims it has lost large sums of money serving Japan and Australia with Bali acting as an air hub.

Garuda's managers claim that operating services from 2 separate hubs incurs costs almost on a par with operating two airlines. Reportedly, if an engine failure happens in Bali a new engine has to be shipped from storage in Jakarta requiring the charter of a special Russian aircraft, a process requiring 1 to 1.5 months during which the airplane remains idle.

• Negotiating traffic rights flying with other carriers serving Jakarta are complicated by the use of Bali as a secondary hub.

Garuda complains that landing and parking fees in Bali are too expensive with insufficient uplift of cargo traffic ex Bali.

Cities Affected

Commencing from the actual date of the change in schedules:

• Sydney and Melbourne Garuda flights will operate directly to Jakarta from where Bali-bound passengers will change to domestic flights.

• Brisbane and Auckland services by Garuda are suspended until further notice.

• Japanese service from Nagoya is also being suspended.

Garuda flights from Tokyo and Osaka will now fly directly to Jakarta with Bali-bound passengers changing to domestic flights.

Garuda will reportedly add more domestic flights between Jakarta and Denpasar to the increase in international passengers destined for Bali.

Predicting the Fallout of Garuda’s Decision

While it's difficult to predict the total impact of Garuda’s decision to close Bali as its secondary hub, the lack of direct seats from Australia and Japan can only further complicate efforts to establish recovery from those markets. Consumers from these markets will now face potentially higher air fares and trips that will now be 4-6 hours longer in flying to Bali or on their return trips home.

Meanwhile, many tourism observers will be watching carefully to see if the Government and Garuda adopt a more liberal "open skies" policies towards all airlines seeking more flight or greater seat capacity to Bali. Despite the poor arrival totals experienced by Bali over the past several years, applications by airlines seeking added capacity to Bali have often been stonewalled by the Indonesian authorities in close consultatrion with Garuda.

The Reaction from Bali

When ASITA's Bali Chairman, Purwa, was asked by balidiscovery.com to comment on Garuda's latest move he said: "Although we can understand the reasons why Garuda made the decision to close Bali as a hub, we are very sad to face these facts. Bali has faced so much since 2002, that we are really back to the bottom in tourist arrivals. With this decision, Bali will move further away from its tourism sources, including the traditional tourists sources of Australia and Japan. . . Adding between 3 hours to a half-day's time on transit, that is if the connection is not delayed in Jakarta, will make the passengers feel very inconvenienced . . . . Bali stakeholders should try to persuade other carriers to fly more planes to Bali directly in the short term, but in the long term Bali should its own airline, so that this favorite island will not be overly dependent on others."


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