Indonesia’s domestic air industry is soaring. Nearly 40 million Indonesians now fly, and new airlines seem to be mushrooming. This is a boom for both the industry as well as the economy.
The growing middle class of the country and the lowering of flying costs in the face of tight competition among the many airlines has fueled demand for air travel in Indonesia.
The domestic airline industry is also a perfect example of how liberalization and market forces combined can boost growth and create new jobs. Other industries must follow suit.
There are several new players on the scene. Pacific Royale Airways Indonesia and Lion Air’s Space Jet will soon take to the skies while Sriwijaya Air will be upgraded to semi-full service. This designation refers to services on board the plane, including meal and baggage allowance and in-flight entertainment.
Low-cost carrier Lion Air, which made a record-breaking deal in November for the purchase of 200 Boeings worth a total of $21.7 billion, will set up Space Jet as its full-service airline sometime in 2012 or early 2013, said Edward Sirait, its general director.
It is clear the industry is growing to meet rising demand from a fast-growing middle class. And with an economy expanding at more than 6 percent per year coupled a with poor road transportation system, the airline industry is expected to grow robustly for some years to come.
But while such growth is good for the country, it will also put pressure on facilities that are stretched to a breaking point. The vast majority of airports in the country are already operating over capacity, including Jakarta’s Soekarno-Hatta International Airport. The country, therefore, urgently needs to build new airports and expand existing ones.
With so many new airlines, the authorities also must pay greater attention to safety issues. A number of high-profile air accidents in the past few years has highlighted the need to improve safety and maintenance standards. Lives are at stake here.
The airline industry is a barometer of rising economic confidence. It can also open up new domestic tourist destinations, but only if the right infrastructure is in place. That remains the Achilles’ heel of the nation.