Indonesia - Country Commercial Guide
Aerospace and Defense

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2020-10-11

Overview

Unit: USD millions

 

2017

2018

2019

2020 (est.)

Total Local Production

484

480

528

581

Total Exports

102

137

144

151

Total Imports

924

908

863

819

Imports from the US

328

438

460

483

Total Market Size

1,306

1,251

1,247

1,249

Exchange Rate

13,548

14,481

13,901

N.A.

Data Sources: Central Bureau of Statistics Indonesia, Trade Stats Express USA. Average exchange rate of Indonesian rupiahs to U.S. dollars from Statista.com.

The Indonesian aviation sector offers significant opportunities as the country is the largest market in Southeast Asia with a population that makes up 40% of the 650 million people in Southeast Asia. The country is ranked as having the second-fastest growing aviation industry in the world after China in terms of aircraft orders and business value.  Being an archipelago comprised of more than 17,000 islands, Indonesia naturally needs air travel for the mobility of its people and goods. The challenges are how the country's infrastructure can follow the rapid development of aviation and how the government will manage its human resources to meet market demands.

The October 2019 crash of a Lion Air flight has had an impact on aircraft sales in Indonesia, but the market has recently shown signs of recovery.

At present Indonesia has 239 airports managed by local and central government, 13 airports managed by State Owned Enterprise PT. Angkasa Pura I, and 16 airports managed by PT. Angkasa Pura II (AP2).  In 2019 Indonesia had 412 domestic routes connecting 135 cities with 12 national airlines in addition to 65 foreign airlines that are active in the market. There are 214 passenger pioneer routes that connect 191 cities and 39 pioneer cargo routes. Jakarta’s primary commercial airport, Soekarno-Hatta International Airport, is the busiest airport in both Southeast Asia and throughout the Southern Hemisphere.

According to the Ministry of Transportation, the number of air transport passengers will increase from approximately 162 million passengers in 2019 to a target of around 202 million passengers in 2024 (assuming a growth rate of 4.59 percent). The Ministry also projects growth in cargo transportation from approximately 778 thousand tons in 2019 to a target of around 1 million tons in 2024 (assuming growth is in the rage of 4.8 to 5.2 percent per year). Based on the Ministry’s growth projections international cargo transportation is expected to increase from approximately ​​178 thousand tons in 2019 to a target of 223 thousand tons in 2024 (assuming growth is in the range of 4.5 to 4.6 percent per year).

Leading Sub-Sectors

PT. Angkasa Pura I (AP1), which operates airports in Eastern Indonesia, projects passenger traffic above 130 million passengers in 2023 with revenue up to 24 trillion Rupiah. In 2020,  AP1 intends to complete the development of a new International Airport in Yogyakarta (Central Java) called Kulonprogo, as well as domestic airports in Semarang (North Java) and Banjarmasin (South Kalimantan). AP1 also plans proactive marketing to increase more direct flights to Denpasar (Bali), Surabaya, and other cities. According to PT. Air Navigation Indonesia, Indonesia has several very high-density routes, such as domestic routes from Jakarta to Surabaya and Bali (ranked sixth in the world), and an international route from Jakarta to Singapore (number 2 in the world). In order to achieve AP1’s long-term investment plan, they will require funding of up to 76 trillion Rupiah over a five-year period. This investment will be mostly allocated to land acquisition and building construction, equipment, and airfield expansion.

PT. Angkasa Pura II (AP2), which operates many airports in western Indonesia, has received international awards for their achievements. For instance, Soekarno Hatta Airport received an award from Skytrax as the world’s most improved airport in 2019, and also won the second-best airport in South East Asia. With the number of passengers up to 70 million in 2018, an 11% increase from the previous year, Soekarno Hatta is ranked the sixth busiest airport in the world.  AP2’s second busiest airport, Kualanamu in Medan, had 11.8 million passengers in 2018, up 17% from the previous year. In the long run, AP2 plans to make a smart connected airport, a combination of technology and information with customer centric operation and stakeholder governance. They envision the smart airport as able to provide comfort to passengers, with increased capacity and reduced costs.  AP2 is now making a Digitally Ready for Operational and Infrastructure Development model to integrate the systems for customer experimentation, operating efficiency and business enhancement. The main programs launched by AP2 in 2019 were flight operation safety and security, airport safety and security, passenger and cargo services, business development and supporting programs, which require a combined investment of 13 trillion Rupiah.

Opportunities

Indonesia’s under-developed public infrastructure could present significant opportunities in aviation. With Indonesian airports already heavily burdened and the increasing growth in air traffic, investments and developments in new airports closest to tourist destinations, refurbishment of existing airports, and construction and improvements to ground infrastructure, runway, and air traffic systems are promising areas for future growth.

Based on their 2019 investment plan data, PT. Air Navigation Indonesia already has 535 navigation tools, 122 surveillance devices, and 24 ATC automation systems. By 2021, they will need an additional 12 navigation tools, 1 surveillance device and 4 ATC automations. Some improvement programs are also budgeted such as projects to restructure the airspace, airline slot time management, departure and arrival flow management, surface radar operation, ATC training, rapid exit taxiway and pilot reaction time.

On April 20, 2015, with the support of the U.S. Department of Commerce and the U.S. Federal Aviation Administration, Minister of Transportation Ignatius Jonan and U.S. Ambassador Robert O. Blake signed an MOU to officially commence establishment of the U.S. – Indonesia Aviation Working Group.  The AWG provides a platform for the U.S. government and companies to engage with Indonesian aviation stakeholders from government agencies, state-owned enterprises, and the private sector in order to share best practices from around the world, and to propose and provide innovative solutions and services to support the growth of the Indonesian aviation sector. There are currently no direct flights between Indonesia and the U.S. despite interest from business leaders and tourism agencies.

The AWG’s activities focus on policy and technical issues facing the Indonesian aviation sector that include:

1)      Air Traffic Management Modernization

2)      Airport Infrastructure

3)      Aviation Safety and Security

4)      Development and Growth of Aviation Support Services

5)      Airspace and Airport Capacity Analysis, Development, and Planning

6)      General Aviation Access and Integration

7)      Cargo Security

Web Resources

(A) Government and Statutory Agencies:

Directorate General of Civil Aviation: http://dephub.go.id/

AirNav Indonesia: www.airnavindonesia.co.id

Angkasa Pura I: www.angkasapura1.co.id

Angkasa Pura II: www.angkasapura2.co.id

Indonesia Central Bureau of Statistic: www.bps.go.id

(B) Airlines:

PT. Garuda Indonesia: www.garuda-indonesia.com

PT. Lion Airlines: www.lionair.co.id

PT. Citilink Airlines: www.citilink.co.id

PT. Sriwijaya Air: www.sriwijayaair.co.id

(C) Trade Associations:

Indonesia National Air Carrier Association (INACA):  http://inaca.or.id/

For questions or more information, please contact Commercial Specialist Kalung Riang at Kalung.Riang@trade.gov