Garuda Indonesia Part 2: US expansion, starting with Los Angeles, will be challenging and risky
Garuda Indonesia is preparing to launch flights to Los Angeles in 2017, contingent on Indonesian authorities securing an expected upgrade from the US FAA to a Category 1 safety rating. US flights represent the biggest – and riskiest – step in an overall strategic initiative by Garuda to boost its international presence.
Garuda's brand is not known in the US market, which it has not served for two decades, and it will have to overcome intense competition. Garuda will be only the third Southeast Asian airline in the US market, following the suspension of Los Angeles by Thai Airways and Malaysia Airlines. However, Los Angeles is very well served by North Asian airlines – most of which offer connections in the Indonesia-US market – and the withdrawal of Thai Airways and Malaysia Airlines speaks to the challenges that Garuda will confront.
Garuda was initially hoping to serve Jakarta-Los Angeles nonstop, which would enable it to differentiate its product. However, Garuda now realises that it will at least initially have to settle on a one-stop product via Tokyo. Garuda will benefit from the ability to carry local passengers between the Japan and the US, but Tokyo-Los Angeles is an extremely competitive route.
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