State fund Danantara’s decision to inject more than 23 trillion rupiah (US$1.37 billion) into Garuda Indonesia has been framed in official statements as a forward-looking intervention meant to stabilize a national carrier and protect aviation sovereignty.
The narrative is polished and familiar. Indonesia presents the move as safeguarding a strategic national asset, yet behind the rhetoric lies a cycle so entrenched it borders on ritual: Garuda nears collapse, the state intervenes, transformation is promised and the airline soon returns to crisis.
For years, the airline has been portrayed as a victim of external shocks rather than a company undone by its own structural failures. Each bailout is described as temporary assistance on the road to a brighter tomorrow, accompanied by stock phrases about strengthening the balance sheet, ensuring operational continuity and preserving national pride.
These assurances, repeated for more than a decade, have long since lost meaning and become placeholders for the absence of real reform.
The disconnect between rhetoric and reality becomes obvious when considering how often Garuda has already been rescued. In 2022, the airline received a 7.5 trillion rupiah injection presented as a definitive reset after years of mismanagement. Yet almost immediately, Garuda slipped back into its loss-making patterns.
That Indonesia is now injecting triple that amount without a clearer plan reflects a refusal to acknowledge that past rescues failed because they treated symptoms rather than the underlying disease.
Equally overlooked is the character of Garuda’s business model. This is not a mass-market airline providing affordable mobility to ordinary Indonesians. It is a premium carrier serving middle- and upper-income travelers on international routes priced far beyond the reach of most citizens.
This raises fundamental questions about the legitimacy of using public-linked funds to keep it afloat. A company that does not serve the masses cannot be defended as a guardian of national interest simply because it carries the national flag on its tail.
Danantara’s mandate sharpens this contradiction. The newly-created fund exists to allocate resources from state-owned enterprise dividends toward investments that strengthen Indonesia’s long-term development prospects—capital that would otherwise support education, healthcare, infrastructure, digital innovation, environmental resilience and job-creating industries.
Garuda does not belong in this category. It is an airline defined by chronic losses, opaque costs, volatile leadership turnover and a governance history at odds with the principles Danantara is meant to uphold.
This is what makes the 23 trillion rupiah injection so deeply concerning. It reveals a misalignment between institutional mandate and political pressure. Instead of channeling capital toward productive sectors with high economic multipliers, Danantara is being used to extend the life of an airline that has shown neither commercial discipline nor sound governance. To portray the bailout as a long-term investment stretches the definition of strategy beyond recognition.
The ethical implications are equally stark. Danantara’s resources derive from profitable state enterprises whose dividends should support the broader public good. Redirecting these funds to rescue a premium airline amounts to an upward transfer of wealth.
The beneficiaries are not ordinary travelers but business passengers, corporate clients, upper-income consumers and private shareholders whose equity values would evaporate if Garuda were forced to confront its own mismanagement. The rescue resembles a protection mechanism for corporate interests, not a policy grounded in public welfare.
Meanwhile, Indonesia’s aviation ecosystem includes multiple low-cost carriers that actually serve the majority of the population and maintain connectivity across the archipelago without reliance on state bailouts. Their ability to compete and operate efficiently underscores the absurdity of treating Garuda as indispensable.
If Garuda is to have a meaningful future, its revival cannot rest on endless infusions of state-linked capital. The airline needs a comprehensive overhaul: uncompromising governance reform, data-driven operational restructuring and rational fleet decisions insulated from political pressures.
Equally important, all shareholders must bear their share of the burden. The state cannot continue rescuing a company in which private investors also hold substantial stakes, particularly when that company does not serve the general public.
Indonesia now faces a pivotal choice. The 23 trillion rupiah injection will either mark a commitment to confronting Garuda’s long-term challenges or confirm a continuation of denial. The absence of a credible roadmap and the recycling of familiar talking points point toward the latter.
What the airline needs is not another rescue but a redesign. Garuda must undergo a sweeping overhaul across its financial, operational and governance frameworks, and realign its business model with the public interest. Only then can it claim to be a national asset rather than a perpetual liability.
Most critically, all stakeholders, including private shareholders, must share the burden of recovery. The government cannot keep absorbing losses while others retain the potential upside. Until these steps are taken, every rupiah invested in Garuda will remain a wager against reality—an expensive act of hope the airline has done little to earn.
Ronny P Sasmita is senior analyst at the Indonesia Strategic and Economics Action Institution
