Indonesia’s Citilink and Pelita Air Merger Set for Completion by 4th Quarter of 2024

Indonesia’s aviation landscape is poised for a significant transformation as plans for the merger between Citilink and Pelita Air move forward. Here’s a breakdown of the latest developments and what they mean for the industry:

Merger Timeline: According to Irfan Setiaputra, CEO of Garuda Indonesia, the merger between Citilink and Pelita Air is slated for completion by October 2024. This timeline aligns with the conclusion of the current government’s term, providing clarity and stability for the consolidation process.

Government Involvement: Setiaputra emphasized that the progress and outcome of the merger are contingent on the Indonesian government’s decisions. With both Citilink and Pelita Air being state-owned entities, the government plays a pivotal role in shaping the future of these airlines and the broader aviation sector.

Strategic Objectives: The merger aims to consolidate Pelita’s scheduled passenger operations with Citilink, Garuda’s low-cost subsidiary. By combining resources and operations, the merged entity seeks to enhance efficiency, optimize route networks, and streamline services for passengers.

Government-Owned Entities: Pelita Air’s parent company, PT Pertamina, is a state-owned oil and natural gas corporation, majority-owned by the government. Similarly, Garuda Indonesia’s parent entity, PT Garuda Indonesia, is majority government-owned. The merger reflects the government’s strategic vision to rationalize and strengthen its portfolio of aviation assets.

Further Consolidation: In addition to the Citilink-Pelita merger, plans to merge Garuda Indonesia Airlines with PT Aviasi Pariwisata Indonesia, operating as InJourney, are also underway. InJourney is a government-owned holding company with interests in aviation and tourism. Setiaputra anticipates that this merger will occur concurrently with the Citilink-Pelita merger, further reshaping the aviation landscape in Indonesia.

Impact on the Industry: The consolidation of airlines under government-owned entities is expected to bring about operational synergies, cost efficiencies, and improved competitiveness in the Indonesian aviation market. By rationalizing resources and strengthening market position, the merged entities aim to navigate challenges and capitalize on growth opportunities in the post-pandemic era.

In summary, the impending merger between Citilink and Pelita Air represents a strategic move to optimize resources, enhance competitiveness, and drive sustainable growth in Indonesia’s aviation sector. With government backing and a clear timeline in place, the consolidation process is set to reshape the industry landscape and position Indonesian airlines for long-term success.