With referance to the decision made by the Business Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha - KPPU) which accuses Garuda Indonesia of cartel action in the implementation of fuel surcharge, we would like to explicitly express our objections as follows :

• Garuda Indonesia has always uphold the principles of Good Corporate Governance and acknowledges the supremacy of law as well as having the utmost respect for the functions of KPPU as an institution established by the Constitution to supervise business competition in Indonesia.

• However, KPPU's pronouncement against Garuda Indonesia is based on insubstantial and inaccurate data. In Garuda Indonesia's case, KPPU based their analysis on data for the years 2006-2009 despite the fact that Garuda Indonesia only submitted data for 2006-2008 as data for 2009 are yet to be audited. 

• Besides, the analysis and statistical tests conducted by KPPU are inadmissible and inconclusive as only two of the twelve existing airlines provided comprehensive data.

• Fuel surcharge is common practice in the airline industry. Air carriers impose fuel surcharge in response to the rise in fuel prices.

• Varying fuel surcharge is an attempt by air carriers to narrow the gap between the determined estimate of oil prices and the fluctuating or increase of oil prices in the market. Indeed, like any other airline, Garuda Indonesia's decision to apply fuel surcharge is by no means an attempt to seek profit, rather it is an effort to anticipate increases in fuel costs.

• Moreover, Garuda Indonesia does not benefit from the imposition of fuel surcharge since the total fuel cost borne by Garuda Indonesia outweighs the amount received from fuel surcharge. 

• In addition, the implementation of fuel surcharge is not against the law and allowed as stated in Act No. 1 of Year 2009 and Minister of Transportation's Decree No. 9 of Year 2002 on Commercial Scheduled Air Transport Passenger Tariff for Domestic Economy Class.

• Garuda Indonesia has never jointly imposed fuel charge with other carriers considering Garuda Indonesia is the only "full service" airline in Indonesia, thus has a higher cost structure that other airlines that offer low cost service.

• Profits gained 2007-2009 are the result of an ongoing corporate transformation program which included the restructuring of routes, fleet modernization, efficiency program and the development of a management revenue program.

• On the strength of the above reasons, Garuda Indonesia strongly objects to the pronouncement made by KPPU on Wednesday, May 5 2010 regardless of all legal and economic considerations used to reach the decision. 

• In consideration of the fact that the judgment passed by KPPU is not irrevocable, Garuda Indonesia will request the assistance of its legal advisors in reviewing KPPU's decision and to determine the next legal course of action.

Jakarta, May 4, 2010

PT. GARUDA INDONESIA
VP.CORPORATE COMMUNICATIONS

PUJOBROTO