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Airline Expansion Hindered by Airports

JAKARTA - Indonesia National Air Carriers Association (INACA) has assessed that the 11 percent average annual growth of plane passengers in Indonesia is not balanced out with improvement of airport infrastructure.

Secretary General of INACA, Tengku Burhanuddin, said that at present the biggest problem is the limited capacity of Soekarno-Hatta Airport in Cengkareng. Flight slots in Indonesia’s largest airport are currently full, thus hindering addition of new flight routes.

Meanwhile, according to him, the effort to maximise the role of Halim Perdanakusuma Airport in East Jakarta as an alternative airport, is still with the government.

“A timely discussion must be done so that more flight slots can be opened”, he said on Sunday (28 October).

He revealed that the growth of passenger flights in the country is still positive and has not reached its saturation point yet despite the fact that several airlines have begun to aim for the ASEAN market.

According to him, national airlines’ expansion to the Southeast Asian region does not mean that the domestic market has reached its saturation point.

“Everyone sees that Lion Air enters the Malaysian market and assumes that our market is limited; it is not like that. Malaysia probably just has fewer players. We must not interpret this as meaning our market is already saturated”, he said.

He noted that the figure of scheduled passengers for domestic routes grew by 16 percent to 60.20 million in 2011, compared to 2010’s 51.78 million. Meanwhile, the figure for international routes grew by 23 percent to 8.15 million passengers, compared to last year’s 6.61 million.

INACA’s annual report notes that the aviation market in Indonesia will grow at an average of 11 percent in the next five years.

The report also reveals that Juanda Airport in Surabaya has served passengers at a rate of 200 percent of its existing capacity, while Sultan Hasanuddin Airport Makassar that has just been constructed is currently serving passengers at its maximum capacity.

The report also emphasises the necessity to anticipate average annual passenger growth of 10 percent in major cities, considering that it is also one factor that causes flight delays.

On the aspect of domestic flight business competition, Burhanuddin judged that there will not be many changes, despite the cancellation of acquisition of Batavia Air by AirAsia and the establishment of Malindo Airways in Malaysia, which belongs to Lion Air and National Aerospace and Defence Industries (NADI) Sdn Bhd.

To date, the market share of national airlines is still dominated by Lion Air, Garuda Indonesia, Sriwijaya Air, Batavia Air, and AirAsia.

Last year, Lion Air held a market share of 41.48 percent for domestic airplane passenger, followed by Garuda (22.76 percent) and Sriwijaya Air (12.26 percent).

Full Service Market
Burhanuddin projected that the estimation for Indonesia’s economic growth to exceed 6 percent will encourage improvement of economic activities, which stimulate people’s needs for air transportation.

The increase in the demand and improvement of people’s purchasing power may prompt a shift from low cost carrier (LCC) to full service.

General Affairs Director of PT Lion Mentari Airlines, the operator of Lion Air, Edward Sirait, predicted that market shift from LCC to full service will be at a rate of 3–5 percent per year along with improvement of people’s welfare, lifestyle, and demand for long-range travel.

“Travellers want everything to be enjoyable. They choose products that are better than before. People also demand additional facilities; for example, they will not want to travel for 5 hours from Jayapura to Jakarta without a meal”, he said.

For this year, he estimated that the number of full service passengers will hit 28 million people, while in 2013, it will hit an even higher figure of up to 35 million.

Considering the potential, the company eventually scheduled Batik Air, a full service airline owned by Lion Air, for operation beginning in March 2013 with 10 aircraft. (tahir.saleh@bisnis.co.id)

Airplane Passengers 2011 (Million People)

International

Sriwijaya Air 0.18 2.25 %
Batavia Air 0.29 3.59 %
Lion Air  0.96 11.8 %
Garuda Indonesia 3.10 38.03 %
Indonesia Air Asia 3.38 41.58 %
Others - 2.75 %


Domestic

Merpati 2.18 3.64 %
Wings Air 1.98 3.37 %
Batavia Air 6.75 11.25 %
Sriwijaya Air  7.38 12.3 %
Garuda Indonesia 18.76 22.82 %
Lion Air  24.97 41.59 %
Others - 5.03 %

Source: MoT
Bisnis/Ilham Nesabana