Garuda-Sriwijaya tie up: an Indonesian domestic aviation duopoly?

Garuda Indonesia's LCC subsidiary Citilink has taken over management of Indonesia's third largest airline group, Sriwijaya, resulting in further consolidation in the country's domestic market. The Garuda and Sriwijaya groups consist of four airlines which together account for approximately 45% of Indonesia's domestic market; Lion Group occupies most of the rest.

Managing four brands could prove to be difficult, particularly given that the Garuda-Sriwijaya deal does not include equity (yet). However, combining the four airlines gives Garuda a powerful portfolio of slots in Indonesia's tightly constrained airport system, enabling it to compete more efficiently against the rival Lion Group.

Sriwijaya survived earlier periods of consolidation, making it the only remaining significant domestic competitor after Lion and Garuda, but has struggled in recent years as domestic market competition has intensified.