Vietnam Airlines and Garuda Indonesia sign Memorandum of Understanding on cooperation expansion

Jakarta, August 23rd, 2017, Vietnam’s flag carrier Vietnam Airlines and Indonesia’s flag carrier Garuda Indonesia have signed a Memorandum of Understanding (MOU) to strengthen cooperation between the two airlines in the areas of codeshare partnership, services, MRO (maintenance, repair, and overhaul) and cargo. The signing ceremony was held on the sideline of General Secretary of Vietnam Communist Party Nguyen Phu Trong’s visit to Indonesia.

With the MOU signed today by Mr. Duong Tri Thanh, President and CEO of Vietnam Airlines, and Mr. Pahala Mansury, President and CEO of Garuda Indonesia, the two airlines seek to expand their current codeshare partnership in the following routes: Hanoi - Ho Chi Minh city, Hanoi/Ho Chi Minh city - Singapore, Singapore - Jakarta/Bali and Jakarta - Bali. Both airlines agree on seeking opportunities to enhance other areas of cooperation such as services, MRO & cargo on the basis of mutual benefits. The expansion of partnership between the two airlines is also supposed to strengthen their cooperation within and contribute to the development of Skyteam Alliance.

Commenting on the signing of this agreement, Mr. Duong Tri Thanh, President and CEO of Vietnam Airlines said: “Since 2006, Vietnam Airlines and Garuda Indonesia have effectively cooperated with tangible result. This MOU today takes our cooperation further in the direction of a solid and mutually beneficial partnership, helping both airlines achieve the vast potential of the market. With our long-time partner Garuda Indonesia, we hope to see more passengers travelling between Vietnam and Indonesia, and our customers can benefit from more flight options as well as excellent international service quality from Asia’s two leading airlines.”

Mr. Pahala Mansury, President and CEO of Garuda Indonesia said: “We are pleased to announce this partnership with Vietnam Airlines which extends our network even further within the Southeast Asia. Vietnam is an important market for Indonesia and through this partnership we can offer more travel options for the increasing number of passengers travelling between the two countries. At the same time, the agreement is expected to boost trade and tourism activities by making Indonesia much more accessible for Vietnam visitors."

According to the Centre for Asia-Pacific Aviation, Southeast Asia’s aviation market is expanding faster than the global average across nearly every country in the region, thanks to the region’s economic and middle class growth. Six of Southeast Asia’s 10 countries enjoyed double-digit growth in passenger traffic, led by Vietnam. This trend is forecast to continue in 2017.

The need for air transport services in Indonesia is still expected to strengthen in line with improvement in economic growth. Total passengers are projected to multiply 1.00-2.5 times of Indonesia’s GDP. Based on the data from the Statistics Indonesia (BPS), total international passenger traffic in Indonesia went up 8.16% from 13.66 million in 2015 to 14.77 million in 2016. The growing size of international passengers from Indonesia were likely to be driven by the stronger economic activity and the rising number of the middle-class. It was shown by the number of domestic passengers which saw 16.97% increase from 68.78 million in 2015 to 80.45 million in 2016.

The vast growth in passengers makes Indonesia the third largest country in aircraft purchase after China and India. The strong development and growth of Indonesia’s aviation industry open up new opportunities for airline business. Additionally, solid economic growth, which is supported by the burgeoning middle-class segment, will further promote air travel.