IATA Calls for Stakeholder Support to Develop Potential of Indonesia’s Aviation Sector

The International Air Transport Association (IATA) has called on Indonesia’s stakeholders to partner in the development of an aviation masterplan based on global standards to ensure that the country is served by an aviation industry performing at its best. IATA identified three potential elements to be addressed in the masterplan: improving safety, ensuring capacity and a smart regulation framework.

“Indonesia’s aviation potential is huge. By 2034, it is expected to be the sixth largest market for air travel. By then some 270 million passengers are expected to fly to, from and within the country. That’s three times the size of today’s market. There is a big role for collective leadership among industry partners – including the government – to make the aviation sector flourish,” said Tony Tyler, IATA’s director general and chief executive officer, in his keynote address to the IATA Aviation Day in Jakarta.

“Indonesia needs an aviation masterplan based on global standards and developed in partnership by aviation stakeholders including the government. Such a plan should set a common vision for addressing top priorities such as safety, capacity and regulation. And of course it must be followed by real actions,” he added.

Safety is aviation’s top priority and among the biggest concerns for the successful development of aviation in Indonesia. Indonesia has had at least one hull loss every year since 2010. In the International Civil Aviation Organization’s (ICAO) Universal Safety Oversight Audit Program (USOAP), Indonesia was assessed as below the global average. The US Federation Aviation Administration also downgraded Indonesia to Category 2 in its International Aviation Safety Assessment programme, while the EU continues to have a ban on all but five Indonesian carriers.

IATA is investing resources to improve safety in Indonesia: the most recent being a partnership for quality workshop that was held in Jakarta last week with the support of national carrier, Garuda Indonesia. But, Indonesia is not, however, taking full advantage of IATA’s resources, according to Tyler.

“The IATA Operational Safety Audit (IOSA) is a global standard and is at the core of our efforts to improve safety. But of the 62 Indonesian airlines operating scheduled or chartered flights, only Garuda is in the IOSA registry. Making IOSA compulsory for an Indonesian AOC will send a very strong signal of commitment to improve safety. And experience shows us that it will make a difference in safety performance,” he said.

“Turning around a safety record is not easy. The best laid ‘plans’ need to be followed-up with concrete actions. Where this has been done—in Latin America, China, and Nigeria for example—we have seen significant and sustainable improvements. Setting IOSA as one of the standards required for an Indonesian AOC is but one of many needed actions,” Tyler added.

Indonesia’s traffic growth needs to be supported by the aviation infrastructure, both on the ground and in the air. For Indonesia this effectively means building a world-class hub, managing scarce capacity to global standards and modernising air traffic management. Indonesia’s airports are in urgent need of additional capacity. By 2034, Indonesia’s airports are expected to handle an additional 183 million passengers compared to today.

Tyler commended the government for its plans to expand infrastructure –building another 62 airports over the next five years, and terminal expansions at Jakarta’s Soekarno-Hatta International Airport. “But the capacity problem in Jakarta is nowhere near being solved even with the terminal upgrades. Indonesia needs a hub. The most efficient solution is to maximise the potential of one airport – Soekarno Hatta where significant investment has already been made,” said Tyler.

Soekarno-Hatta has the possibility to grow. There is plenty of land and the basic runway structure is relatively efficient. The terminal areas will, however, need a major re-development. “The vision would be something like the super-terminals that we see in Beijing, Hong Kong or Incheon. By starting from scratch and working in close consultation with the airlines I am confident that we would achieve a world-class facility designed around key new technological innovations,” explained Tyler.

But, he acknowledges that Soekarno-Hatta cannot be re-developed over-night, so the airport’s scarce existing capacity must be allocated based on the IATA Worldwide Slot Guidelines. “The network nature of the airline business means that global standards are critical. Unfortunately there are a large number of instances where Indonesia is not playing by established international rules” said Tyler.

There are two slot management processes at Indonesian airports – one for domestic flights and another for international flights even though both are managing the same runway capacity. There is also no independent slot coordinator at the airports. “The IATA team is ready to assist with the introduction of professional and independent slot coordination, who could bring the working procedures in line with global standards,” said Tyler.

Increasing traffic puts pressure on air traffic management and orderbooks from the world’s manufacturers show more than 800 aircraft on order for Indonesian airlines. “As they are delivered, Indonesia’s already busy skies will become even more crowded,” said Tyler.

The imminent full introduction of Automated Dependent Surveillance—Broadcast (ADS-B) will be a major step forward. But there is lot more work to be done, notes Tyler, who urged Indonesia to improve the skills of air traffic controllers, to move forward with the implementation of Performance Based Navigation and introduce Air Traffic Flow Management (AFTM).

It is also important to have government regulations which are consistent with global standards and facilitate success and growth. “But Indonesia has several regulations which are counter-productive and which treat airlines unlike any other comparable business,” said Tyler.

For example, airlines are required to sell air tickets in Indonesian Rupiah, yet their suppliers – ground handlers and fuel suppliers - can bill them in US dollars; despite the competition in the market, airlines must price within regulated limits; airlines are forbidden from selling tickets at airports when train tickets can be purchased at a train station; Indonesia has mandated a 2% biofuel blend for aviation jet fuel uplifted in Indonesia by 2016. Yet there is no control on the price or subsidies on the production side.

Tyler encouraged Indonesia to apply smarter regulation principles when establishing new regulations. These include clearly defining the problem to be solved, consulting with the industry, conducting rigorous cost-benefit analysis and ensuring consistency with global standards where they exist.