Apr 1, 2013

Indonesia - Indonesia expands aviation service ahead of ASEAN Open Sky policy in 2015

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Indonesian airline firms have moved to expand services in anticipation of the implementation of ASEAN Open Sky policy slated for 2015 that allows people living in Southeast Asia to take no-frill flights to any cities in the region.

The moves taken by airlines in the region's largest economy include procuring brand new planes and improving plane service centers.

Indonesia's Central Statistical Bureau (BPS) reported that Indonesian airline firms spent some 35.2 trillion rupiah (about 3. 6 billion US dollars) to procure new planes throughout last year.

Indonesia's flag carrier Garuda Indonesia spent more than half of the total spending to procure 11 Airbus A330-300 and 18 Boeing planes with deliveries expected until 2015.

Indonesia's largest low-cost airline firm, Lion Air, signed a record-breaking contract to purchase 234 Airbus planes last week worth 23.6 billion US dollars, which is the biggest single purchase contract in Airbus' history. The delivery of those planes was scheduled from 2015 to 2026.

Earlier in 2011, Lion Air signed another major purchase contract worth 21.7 billion US dollars to buy a total of 230 Boeing 737 planes.

Besides the two largest airline firms in their respective classes, some other Indonesian airline firms also procured passenger jet planes from Russia and Canada. Meanwhile, propeller planes have also been massively ordered by smaller airline firms operating flights to remote destinations in the country's far- flung eastern region.

Initiatives to buy more planes by local airline firms were fully backed by Coordinating Minister for the Economy Hatta Radjasa, who said that such a move would spur growth.

Indonesia has been demonstrating impressive economic growth in the last few years amid crisis that battered global economies. It attained 6.3 percent growth in 2012, down slightly from 6.5 percent in 2011. The largest economy in the region has targeted a 6.8 percent growth this year and more than 7 percent in the following years along with recovery of the global economy.

Eyeing the business opportunity that can be tapped from the rapid flight business growth, Garuda Indonesia has improved services at its Garuda Maintenance Facility (GMF), a passenger jet engine maintenance service center. It has teamed up with US- based jet engine producer General Electric to provide services with clients from domestic and foreign countries.

Indonesia's flight transport was served by 53 airline firms that operate around 1,000 planes at present.

Learning of the rapid growth of domestic and international flights, the government also has taken anticipating moves by constructing more airports to facilitate rapid-growing passengers.

Thirteen out of 24 new airport projects located in several cities across the country have been designated to commence operation this year.

According to the BPS, aviation passengers in Indonesia went up 10 percent last year to 72.4 million, of which 66.62 million were domestic air travelers.

Indonesian Transportation Ministry initially estimated that domestic and international flight passengers would grow more than 15 percent per year.

International Air Transport Association (IATA) estimated that Indonesia's annual domestic flight growth may reach 10 percent from 2010 to 2014. Indonesia was expected to become the world's ninth largest domestic flight market.

In terms of international flight, Indonesia was expected to become the sixth largest market with annual growth estimated at 9. 3 percent.


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