Pacific Royale Airways: Indonesia’s Next Full Service Carrier

Garuda Indonesia will soon have some new competition in the form of Pacific Royale Airways when the new carrier begins service next month. The airline will begin with a fleet of 2 Airbus A320s and 2 Fokker 50s, with Airbus A330s to be introduced later on. The airline will be competing with Garuda for marketshare in the full service carrier segment of the market. Indonesia, which has very low (<10%) domestic low cost carrier penetration, has reasonably high yields. Geographically, the country is on an archipelago, meaning that air travel is necessary to carry people around the country. This means that Indonesia is a massive market, which is willing to pay extra for a good product. That is the market that Pacific Royale plans to serve.

Pacific Royale will be partnering with Lumexis to bring top class FITS in-flight entertainment technology to its passengers on its A320 aircraft. This lightweight fiber-optic technology is of the most modern technologies out there. It will keep costs low while providing passengers top-quality entertainment.

The carrier plans to grow rapidly to over 20 A320s within the next few years, connecting major Indonesian cities using multiple focus cities. The carrier will also base their Fokker 50 turboprop aircraft at these focus cities, using feed from smaller markets to feed jet services. The carrier also plans to serve regional international destinations soon using A320s, and later on A330s. The carrier is also considering using A330s for longer international routes.

Pacific Royale plans to grow their Fokker 50 fleet to 5 within the first year. This is because Indonesian regulations require that all airlines operate 10 aircraft and own at least 5 within the first year of operations. Fokker 50s, which are relatively cheap to obtain, will allow Pacific Royale to meet this requirement.

Asked why Pacific Royale will be successful, Chairman Tarun Trikha said, “[Pacific Royale will be] a modern airline which brings together a full service experience combined with friendly technology and advanced entertainment. And at a pricing that’s affordable; giving right value for money to customers.”

If Pacific Royale is able to turn this vision into reality, it has the potential to be an incredibly successful airline. Indonesia has a market which is growing very quickly. Additionally, the market has very low LCC penetration, with only the Lion Air Group having a major presence in Indonesia. That means that passengers expect and are willing to pay for a full service carrier, even on shorthaul services.

While Indonesia is a major growth market, Pacific Royale won’t have it easy. The airline will face significant competition from Garuda Indonesia, the airline which currently occupies the top end of the market. While the airline does not have the best reputation, it has been improving a lot in recent years. The flag carrier is investing in a major fleet renewal plan, and it has been upgrading its inflight product as well. The airline will be joining SkyTeam early next year, which will also give it an advantage.

In addition to competition from Garuda at the top end of the market, Pacific Royale will be facing Lion Air, another major competitor. Lion Air made major waves in aviation industry circles recently when it ordered 230 Boeing aircraft. It is clear that Lion Air is committed to expansion in the Indonesian market.

Between Lion Air and Garuda, Pacific Royale has some formidable competitors. However, if the airline manages to identify profitable niches and stay away from competition, it has the potential to do very very well.