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Jakarta, July 25, 2026 – Indonesia’s state owned asset manager Danantara is considering a landmark merger between Garuda Indonesia and Pelita Air, a move that could redefine the nation’s aviation industry while advancing President Prabowo Subianto’s ambitious plan to streamline state owned enterprises.
The proposal, revealed by Dony Oskaria, Chief Operating Officer of Danantara and head of BP BUMN, places Garuda Indonesia as the holding airline, with Pelita Air folded into its operations.
Oskaria stressed that aviation requires “day by day and minute by minute” management, underscoring the urgency of consolidation to achieve efficiency and competitiveness.
Garuda Indonesia, the country’s flag carrier, has long struggled with debt and repeated restructuring efforts.
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Pelita Air, a subsidiary of Pertamina, operates as a smaller domestic airline with limited market presence.
By merging the two, Danaharta aims to create a stronger national airline capable of competing with regional rivals such as Singapore Airlines and Malaysia Airlines.
The merger plan is part of a broader consolidation drive targeting Indonesia’s sprawling state owned enterprises.
President Prabowo has set a goal of reducing the number of SOEs from 1,077 to 350 by the end of 2026.
According to government figures, Rp50 trillion has already been saved through closures and mergers, with total savings projected to reach Rp70–80 trillion.
For the aviation sector, the merger promises several strategic benefits. Integrated ticketing systems, upgraded lounges, improved in flight catering, enhanced loyalty programs, and stronger crew training are among the service improvements envisioned.
Operational efficiency is also a key goal, with the government emphasizing profitability on a per flight basis.
Yet challenges remain. Garuda’s history of financial instability raises questions about its ability to absorb another airline without adding to its burden.
Aligning Garuda’s international operations with Pelita’s domestic focus could create overlaps that complicate integration.
Moreover, Indonesia’s aviation market is dominated by low cost carriers such as Lion Air, meaning the merged entity must deliver tangible service improvements to attract passengers.
The government views the merger as a strategic step toward building national champions in key industries.
By consolidating resources and cutting inefficiencies, the administration hopes to strengthen Indonesia’s economic resilience while positioning its airlines to compete more effectively in Southeast Asia.
For travelers, the merger could bring more seamless ticketing and loyalty programs, potentially improving the passenger experience.
For the industry, a stronger Garuda Group may challenge regional competitors, though execution will be critical.
And for policymakers, the move reflects Prabowo’s broader economic agenda of efficiency, fiscal discipline, and consolidation.
As Indonesia pushes forward with its SOE reforms, the Garuda-Pelita merger stands as a test case for whether consolidation can deliver both financial stability and improved services.
Success could mark a turning point for the nation’s aviation sector, while failure would underscore the risks of merging troubled enterprises in a highly competitive market.
