Emirsyah Satar, president & CEO of Garuda Indonesia, has warned that the slowdown being experience in emerging economies and low-cost carriers adding capacity at a rapid pace, risks overcapacity in the global aviation sector leading to further consolidation.
"I think what's going to happen is there's going to be a consolidation. You see it with airlines in Indonesia, some of them are already closing their routes – they will be consolidated. The market will react," Satar told CNBC.
Satar also commented on the damage being caused by the weak local currencies for airlines. The rupiah has lost 16% against the US dollar during the past 12 months, which is hurting Indonesian airlines, specifically those with no international flights. Even though jet fuel prices have softened, the weaker exchange rate is offsetting cheaper prices, with yields under significant pressure.
For Garuda, the focus is currently on cost-cutting and increasing aircraft utilization.