Garuda focuses on safety to rebuild its brand

Banned from flying to Europe owing to poor safety standards, teetering on the edge of bankruptcy and owing millions of dollars to its debtors, Garuda Indonesia was one of Asia's weakest airlines and suffered international disrepute. But today, the refreshed brand is on an aircraft-buying spree and is set to give its Asian competitors a run for their money.

Last month, Garuda returned to Europe with its first flight to Amsterdam. Recognising the airline's significant safety improvements, the European Union had lifted its ban on Indonesia's national carrier in June 2009.

The new flight marked the end of a year of rapid transformation for Garuda, the high point of which came in May this year when industry consultancy Skytrax awarded it the title of World's Most Improved Airline.

"The rebranding of Garuda is part of a much broader strategy of repositioning the airline as an Asian carrier capable of competing with other major regional airlines," says John Bailey, managing director, ICON International. "Garuda has a number of advantages. Indonesia is one of the world's fastest-growing economies and its enormous domestic demand insulated the airline from the worst effects of the global financial crisis. Its rich cultural heritage will continue to drive travel demand domestically and internationally."

Donning a new livery, the airline's refreshed fleet will extend the brand's ‘Garuda Indonesia experience' through its interiors, uniforms and in-flight services. This new brand positioning is all part of what CEO Emirsyah Satar calls a "quantum leap" in business strategy. Alongside safety, he has overhauled every other aspect of Garuda's business, including finance, operations and service delivery. The CEO has said that within five years the airline will increase its operating revenue three fold from the 2008 figure of Rp18.1 trillion (US$1.81 billion).

Key to the rebirth of the airline has been its focus on safety, something fundamental to building passenger - and airline authority - trust. Satar engaged safety expert George Snyder, who led Korean Air's operational turnaround, and Garuda is now audited for its safety standards and certified by IATA Operational Safety Audit (IOSA).

Though Garuda's quantum leap is admirable, Shashank Nigam, a Singapore-based airline marketing and branding strategist, says the brand still needs to re-build trust. "Perceptions from the past linger in the minds of travellers, especially Europeans," he says. "Passengers view safety as more than just certification; it is entrenched in their minds as an assurance that comes from a lengthy track record."

Shukor Yusof an aviation analyst at Standard and Poors, agrees. "Garuda has made a profound turnaround and I am confident that Satar will be able to restructure its debts, but the airline must establish safety as a record first before deciding to expand."

Yusof also points to challenges posed by competition from budget airlines and other Asian carriers with established routes. "Airlines such as Cathay Pacific or Singapore Airlines offer more than just competition to Garuda," he says. "Their lengthy record in the industry enables them to absorb external shocks such as the effects on air travel of the recent volcanic ash from Iceland, to which Garuda is still vulnerable."

Satar, though, is optimistic that Indonesia's 240 million people, 17,000 islands and positive growth in the face of recessionary forces will give enough reason for Garuda to prosper.

This article was originally published in the 15 July 2010 issue of Media.