Etihad increases SE Asia presence with Garuda code-share

Etihad Airways yesterday signed a code-sharing agreement with the Indonesian national carrier, Garuda.

The code-share deal, the 42nd signed by Etihad, was described by analysts as a further blow to the airline industry's traditional "alliance" structure. Andrew Henderson / The National

Etihad Airways yesterday moved to increase its presence in South East Asia, signing a code-share agreement with the Indonesian national carrier Garuda.

The code-share deal, the 42nd signed by the carrier, was described by analysts as a further blow to the airline industry's traditional "alliance" structure.

"As Etihad surges to the front in the global competitive stakes, this [deal] will make rising carriers from other burgeoning markets question whether their future is with a traditional [airline] alliance or to be anchored with a Middle East network carrier," noted the aviation analyst, The Centre for Aviation (Capa), after the announcement. "It is Etihad's trademark strategy and it has worked well for it, allowing it a strong competitive position alongside much larger Emirates Airline and an expanding Qatar Airways."

Under the deal Garuda will have its four-weekly service between Jakarta and Amsterdam stop over in Abu Dhabi, from where it will code-share to 31 Etihad destinations across the GCC, Levant, Africa, Europe and North America. Garuda will also code-share on Etihad's service to Abu Dhabi from Jakarta, and Etihad will place its "EY" code on Garuda's Jakarta to Denpasar (Bali) and Kuala Lumpur flights.

"Indonesia is the world's fourth most populous nation and is an important source of global business and tourism growth," said James Hogan, Etihad's president and chief executive. "This new agreement will position both airlines to benefit from the strong demand of travel between Indonesia, the Middle East and Europe that we have seen in recent years.

"It will also stimulate trade in foodstuffs, manufactured goods and other commodities between Indonesia and trading partners in the western hemisphere which, in turn, will contribute to the profitability of the airlines' cargo operations on the route."

According to the most recent IMF figures for Indonesia's top 20 major trading partners, North America, Europe and the Middle East account for more than 20 per cent of Indonesia's trade, worth US$57.68 billion (Dh211.85bn).

"Indonesia is particularly attractive for the Middle East carriers given the high end-to-end flows to and from the Middle East, supplementing their standard long-haul to long-haul connections," said Capa. "Trade of course will follow, and be made possible by, air services, so the Etihad-Garuda partnership is a timely development".

A survey this year from Ernst & Young found that Indonesian companies believe their strongest growth in the medium term will come from the Middle East and North Africa.

"Through this partnership, Garuda Indonesia will be able to extend its service to Europe, North America, Middle East and Africa," said Emirsyah Satar, the chief executive of Garuda. "And Etihad Airways will provide more convenient connections for their passengers in Indonesia, Australia and Japan."