SINGAPORE—A potential merger of Indonesian government-backed carriers Garuda Indonesia and Pelita Air is still on the table, executives from both airlines have said.

Erick Thohir, Indonesia’s minister in charge of state-owned enterprises, told Reuters the airlines could be merged to “strengthen the aviation industry” and “ensure affordable ticket prices.”   

Pelita Air is a subsidiary of PT Pertamina, Indonesia’s state-owned petroleum company.

Garuda CEO Irfan Setiaputra told local news outlet Tempo that merger discussions, while still in the early stages, are ongoing. Garuda is exploring “various business synergy opportunities in order to optimize performance profitability while strengthening the business ecosystem of the aviation industry in Indonesia,” Setiaputra said.

“I am supporting the state-owned airlines’ synergizing process to be healthier and maintain the affordability of ticket prices and the national air connectivity,” Pelita Air Director Dendy Kurniawan told Tempo.

Talk of a merger—particularly between Pelita and Garuda’s low-cost subsidiary Citilink—is nothing new. Indonesia’s State-Owned Enterprises Ministry considered such a move at the height of the pandemic. At the time, Garuda was undergoing a $9 billion restructuring process, and its narrowbody aircraft were grounded due to the company’s inability to pay its leases—which resulted in a lack of domestic Indonesian capacity and the drove up air fares.

With only seven Airbus A320s in Pelita’s fleet, it is unlikely that the merger would provide a significant injection of capacity into the market. CAPA – Centre for Aviation and OAG Schedules Analyser data shows that Pelita accounts for just 2.1% of Indonesian domestic air transport capacity.