Indonesia's aviation sector sees double-digit passenger growth for 2018

Aircraft parked at the Soekarno-Hatta International Airport in Jakarta, Indonesia.
Aircraft parked at the Soekarno-Hatta International Airport in Jakarta, Indonesia.PHOTO: ST FILE

JAKARTA (THE JAKARTA POST/ASIA NEWS NETWORK) - Indonesia's aviation industry is forecasting double-digit passenger growth next year due to an expected boom in demand, government and industry officials say.

Transportation Ministry airport director Bintang Hidayat said he predicted the number of air passengers would climb 29.6 per cent to 140 million in 2018, much higher than the projected year-end figure this year of 108 million passengers.

The 2017 figure will also be a 12.45 percent increase from the previous year.

"[The aviation industry's growth] depends on economic growth. I hope the economy will keep growing," he said recently.

The Indonesian government has set a target of 5.4 per cent for economic growth in 2018. It reached 5.06 percent in the third quarter of this year.

Bintang explained that the growth would be supported by airlines adding to their fleet next year.

Bayu Sutanto, scheduled flight division head of the Indonesian National Air Carriers Association (INACA), voiced similar sentiments about next year's predicted double-digit growth, with aviation industry growth typically 2.5 times economic growth. He also pointed to the busy run-up to the April 2019 presidential elections prompting extra travel.

"We are optimistic. Next year is the political year, so there will be a lot of people [taking flights]," he said, adding that 2018 growth would likely surpass the 12 per cent growth projected this year.

Bayu cited airport capacity as the only obstacle that could potentially curb growth.

The busiest airport in the country, Soekarno-Hatta International Airport in Jakarta, for example, can only handle around 43 million passengers until next year, although it is set to handle 60 million passengers this year alone. The airport is undergoing a major terminal expansion programme, with plans to add a third runway as well.

Air transportation is the main way for many Indonesians to travel across a nation with about 17,500 islands. As the economy grows, more people can afford air travel.

From January to September, the number of domestic air passengers grew by 11.36 per cent to 66 million compared to the same period last year, according to the Central Statistics Agency (BPS). Meanwhile, international air passengers increased by 14.47 per cent to 12.5 million.

Even so, INACA remains concerned over the base fare for economy-class flights, which the government has not increased despite skyrocketing operational costs.

The organisation had previously suggested an increase of the base fare, from the current 30 per cent of the ceiling fare for each route to 40 per cent.

The move was suggested to improve the financial condition of Indonesian airlines, despite criticism from low-cost carriers Lion Air and Indonesia AirAsia (IAA).

The minimum price was revised last year to cushion the impact of rising fuel costs and fluctuation in the rupiah's exchange value.

Commenting on the matter, president director Juliandra Nurtjahjo of low-cost carrier Citilink said the airline also expected 10 per cent growth next year with the expansion of new routes.

The airline has so far surpassed the 12 million passengers year-end target earlier this month, and expects the actual year-end figure to hit 12.5 million passengers.

However, the airline will not add to their fleet next year, Juliandro said, rounding the total of the remaining fleet to 50 aircraft. Its parent group, Garuda Indonesia, has postponed delivery of its aircraft in a bid to cut costs amid financial woes.

"We will increase [the number of passengers] to 14 million passengers, without any additional fleet, but we will increase the utilization," he told The Jakarta Post, adding that it will open up new routes in eastern Indonesia and two cities in Southeast Asia.

The country's largest low-cost carrier, Lion Air, has cited the possibility of adding 17 new aircraft next year if growth can reach 10 per cent.

"We will see the market situation. Next year is the political year, so there will be growth, based on some predictions," Lion Air Group president director Edward Sirait said.