Market Demand and Historical Connections

The Netherlands and Indonesia have a long and significant historical connection. Indonesia was once a Dutch colony, and there is a substantial Indonesian diaspora in the Netherlands, with approximately 1.5 to 2 million people of Indonesian descent living there. This demographic has created a strong market for air travel between the two countries. Additionally, the presence of KLM Royal Dutch Airlines, which has been flying to Indonesia since 1924, further solidifies the demand for services between these markets.

Garuda Indonesia's route from Jakarta (JKT) and Singapore (SEA) to Amsterdam via Kuala Lumpur aligns with this demand. Amsterdam's Schiphol Airport is ranked among the top airports globally, and Heathrow's competition remains fierce. However, the route's profitability is influenced by several factors, including the operational costs of maintaining direct flights and the strategic partnerships that enhance the travel experience for both business and tourist travelers.

Comparative Analysis: Singapore and London

Flying from Southeast Asia to London or Amsterdam involves a complex interplay of air traffic and competition. Singapore's Changi Airport, being the world's number one airport, is a significant competitor in this region. Heathrow, too, is highly competitive, with British Airways, Singapore Airlines, and Emirates offering frequent services. Additional competition comes from Qantas, which operates regular flights to London with a stopover in Sydney.

Garuda's flights from Jakarta and Singapore to Amsterdam via Kuala Lumpur provide a cost-effective and high-quality route to Schiphol and the UK via a hopper service. There are also international competitors like Lufthansa and Thai Airways, but their routes are not as centralized, often offering hopper connections.

Garuda Indonesia's repositioning as a high-quality, competitive airline has impacted the profitability of these routes. Rational operating costs and strategic partnerships are key factors in ensuring profitability, especially in heavily competitive markets.

The Unprofitable Route: London-Amsterdam

The London-Amsterdam route, served by various airlines, including KLM, sees intense competition from multiple carriers. KLM, as a codeshare partner with Garuda Indonesia, holds a significant share of the market. The route's profitability is directly impacted by the number of daily flights, which stands at 62 daily, including KLM's services.

Armed with these insights, it is clear that Garuda Indonesia has strategically maintained its presence in a mutually beneficial market (Amsterdam) over a less profitable one (London). The depth of historical connection and the demand from the Indonesian diaspora in the Netherlands are key factors driving this decision.

Conclusion

The choice of operating routes between Southeast Asia and Europe is a complex decision influenced by market demand, historical connections, and operational profitability. Garuda Indonesia's strategic choice to maintain its presence in Amsterdam, rather than London, reflects a careful analysis of these factors. Understanding these dynamics provides valuable insights into the airline industry and the strategic decisions made by national carriers.