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Indonesian Airports Size, Growth, Opportunity

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Indonesian Airports Size, Growth, Opportunity Sector Guide Indonesian Airports Size, growth, opportunity great.gov.uk The UK’s Department for International Trade (DIT) has overall responsibility for promoting UK trade across the world and attracting foreign investment to our economy. We are a specialised government body with responsibility for negotiating international trade policy, supporting business, as well as delivering an outward-looking trade diplomacy strategy. Disclaimer Whereas every effort has been made to ensure that the information in this document is accurate the Department for International Trade does not accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. © Crown Copyright 2019 You may re-use this publication (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence visit: www.nationalarchives.gov.uk/doc/open-government-licence or email: [email protected] Where we have identified any third party copyright information in the material that you wish to use, you will need to obtain permission from the copyright holder(s) concerned. This document is also available on our website at gov.uk/dit Any enquiries regarding this publication should be sent to us at [email protected] Published September 2019 by Department for International Trade Foreword With some 17,500 islands, a west to east distance greater than London to Moscow, a population of about 250 million and a rapidly growing number of middle class consumers, the demand for more and bigger airports, equipment and aircraft will be intense over the coming years. I believe the UK global airport experience and expertise, tailored to Indonesian requirements, can bring a compelling package for Anglo-Indonesian co-operation. This report provides an overview of the airport sector in Indonesia, including its challenges and its considerable opportunities. I’m keen for more medium-sized British companies to take a serious look at the Indonesian market and visit – it is the only way to get a sense of the potential of this Asian giant. UK airport firms that succeed in Indonesia have an on the ground presence and demonstrate persistence, perseverance, and (a gentle) pushiness in their approach. They also recognise that Indonesia is a relationship based market and see my team, and our extensive network, as an extension of their own. I hope we can be part of your firm’s Indonesian success story too. Joel Derbyshire Director of Trade and Investment Department for International Trade British Embassy Jakarta 02 Sector Guide: Indonesian Airports Sector Guide: Indonesian Airports 03 10 New Bali destinations Lake Toba, North Sumatra Tanjung Lesung, Banten Kepulauan Seribu, Jakarta Tanjung Kelayang Beach, Bangka Belitung Borobudur Temple, Central Java Mount Bromo, East Java Mandalika, West Nusa Tenggara Labuan Bajo, East Nusa Tenggara Wakatobi, South Sulawesi Morotai Island, North Maluku increase in people’s ability to travel3. The airport sector plays a massive Increased demand is creating appetite role in the effort as the destinations for improved airport facilities and will generate further demand for air airport experiences. transportation. At the same time, tourism has grown In order to attract both domestic and to be Indonesia’s second largest foreign visitors to the 10 new Balis, the sector and is projected to become Ministry of Transportation’s Directorate Size operation of 169 airports through the the largest by 2020. In response, General of Air Transportation plans Directorate General of Civil Aviation. the Indonesian government has to expand and improve a number of In order to fulfill the ever-growing launched a programme to accelerate airports that are located near the demand for air transportation and its the development of new tourism destinations. facilities, the Ministry of Transportation Growth destinations: the 10 New Balis. The is focusing on the development of new From 2012 to 2016, the number programme is aimed at replicating airports across Indonesia. of domestic flights grew by 5.2% Opportunity the success of Bali as an international annually, whilst the number of As of 2019, Indonesia is home to 297 tourism destination while accentuating Airport investment continues to play 2 1 international flights grew by 4.4%. airports , with more new developments the new destinations’ local offerings. an important role in the connectivity currently underway. 35 of Indonesia’s Indonesia’s air traffic is projected to between regions in Indonesia and the The plan to grow the tourism sector airports are operated by national grow by 4.8% every year until 2025. National Investment Coordinating beyond Bali’s popularity complements operators, while the Ministry of The growing demand is being fueled Board of Indonesia has been tasked the government’s broader strategy Transportation also supervises the by growth in the economy, and an with attracting international investors. for more infrastructure development, particularly to enhance connectivity. The Indonesian Government wants 1 http://hubud.dephub.go.id/?id/bandara/index (data on numbers of airports in Indonesia, in all provinces and all categories) 3 https://www.pwc.com/id/en/media-centre/press-release/2015/english/issues-challenges-for- 2 https://www.pwc.com/id/en/cpi/asset/the-prospects-for-airport-ppps-in-indonesia.pdf airport-investment.html 04 Sector Guide: Indonesian Airports Sector Guide: Indonesian Airports 05 private sector involvement in the Staff training Udara)6 license by the Ministry of manages airports in the western part airport sector, and has released Public Pilot training Transportation. Consequently, most of the country, with supervision from Private Partnership (PPP) projects, Interior fit-out investors might need to work with the Ministry of Transportation and Ministry including the Hang Nadim Airport Security systems Indonesian state-owned enterprises, of State Owned Enterprises. Air traffic in Batam, Labuan Bajo and Lombok Cargo building construction Angkasa Pura I and Angkasa Pura II, control is managed by AirNav (another Airports. ATC equipment which are already in possession of the SOE). Airside operations/ ground licenses.7 The government is also carrying handling equipment out mega airport projects, such as Docking systems Indonesia also has many state owned Indonesian Airlines the construction of Soekarno-Hatta Cargo handling systems companies that excel in infrastructure There are 21 domestic airlines construction. This advantage is Terminal 4 and the new Yogyakarta The government has also identified operating in and out of Indonesian fully maximised by the Indonesian Airport, both of which aim to boost the airport projects which have strategic airports, including cargo airlines, Government to protect the State- number of passengers and improve value for the country’s economy. charter airlines and scheduled Owned Enterprise (SOE) market share. passenger experience. The New The Indonesian Committee for passenger airlines. Some of the most Consequently, it is often preferable Yogyakarta International Airport is Acceleration of Priority Infrastructure well-known ones include national to partner with SOEs rather than scheduled to begin operations this Delivery (KPPIP) has a central role in carrier Garuda Indonesia and its compete directly. year, targeting 2-3 million international monitoring, coordinating and speeding subsidiary Citilink, which make up 26% passengers. With the construction of up the delivery of these projects.4 of the domestic market, as well as low the new Soekarno-Hatta Terminal4, Stakeholders cost carriers Lion Air, Malindo, Wings Jakarta’s capacity will increase to 110 and Batik Air Group which represent Challenges million passengers per year. Government 35% of the domestic market. Air Asia, There are certain challenges for those Sriwijaya Air and NAM Air focus on With such massive airport The Directorate General of Civil wishing to make an investment in the regional routes. development, opportunities remain Transportation from the Ministry of Indonesian airport sector. For example, open for UK expertise and capabilities. Transport oversees and regulates the Operational strategic partners include the Indonesian negative investment UK companies can offer products operations and administration of all subsidiary companies of Angkasa list only allows foreign corporations and services needed by Indonesia airport infrastructure in Indonesia. Pura (AP Logistics, Gapura for ground to take stakes of up to 49% in airport including: handling, AP Hotels & Property operators.5 PPP finance advisory Airport Operators and AP Solutions for IT and facility management). Jasa Angkasa Semesta Procurement advisory The issue of airport licensing has also State-Owned Enterprises Angkasa Pura (JAS) focuses on providing airport Architecture and design been known to cause foreign investors I and Angkasa Pura II are responsible services such as ground handling, consultancy to be reluctant to invest in the airport for the management of airports in Safety and security advisory CRO, Engineering, Flops, Ticketing sector. There is no precedent yet for Indonesia. Angkasa Pura I manages Airport operations advisory and Security, other providers include private sector operators to be awarded airports in central and eastern regions Organisation development Garuda CRO and Garuda Maintenance a major airport operating
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