Insider Stories - Indonesian flag carrier PT Garuda Indonesia Tbk (GIAA) is little affected by the ASEAN open skies pact, international rating agency Fitch Ratings said.

Indonesia is part of the 10 members of the Association of Southeast Asian Nations that agreed to open its skies to the other members, means carriers will see more competition.

Though it is called "open skies" pack, it does not mean for full liberalization of the ASEAN members' aviation sector. The Philippines, for example, will only open airports in other cities, while restricting access in its primary airport in the capital city of Manila.

Indonesian government, on the other hand, was committed to open five international airports in the capital city of Jakarta, Medan (North Sumatera), Bali, Surabaya (East Java) and Makassar (South Sulawesi) by 2015.

"Fitch believes that Garuda will maintain its competitive position in domestic routes, where it has market leadership in full-service carrier (FSC) flights. Domestic routes contributed to almost 80 percent of Garuda's revenue in 2012 and the company has an established presence in flights between Indonesia's major cities,” the rating agency said in a statement on Thursday.

Garuda is rated "A(idn)" with stable outlook.

"Fitch also views as positive Garuda's track record of maintaining a healthy market share in the domestic market. At end-2012, Garuda had around 28 percent of the domestic air travel market, where competition among domestic airlines has already been intense."

Garuda currently operates two major hubs in Indonesia: Jakarta and Denpasar, Bali, where the airports in those cities contribute to about 50 percent of air traffic in the country.

Fitch also viewed Garuda's plan to make Medan as one of its regional hubs and another plan to establish hub operations in Makassar and Balikpapan"as positive to improve the company's connectivity and operating efficiencies."

Such strategies is expected to meet the growing demand in domestic market.

Garuda operates 131 planes as of end of September 2013 and is in the process of expanding its fleet.

Garuda is now not yet a member of any global airline alliance and its plans to become the Skyteam alliance by the first quarter of 2014 will yield in positive impacts "to improve its market presence globally beyond the current regional flights."

GIAA's around 20 percent of revenue last year came from international flights and around five percent was contributed by haj pilgrimage flights. Garuda is the sole provider from Indonesia.