AIRLINE INDUSTRY INCREASINGLY COMPETITIVE

Airline business in Indonesia is on the rise. Currently, there were 16 airlines that operate on fixed schedule and 22 chartered flight operators. The airline activity is supported by approximately 800 aircrafts every day wading through the archipelago. Each year, growth in passenger number reached an average of above 15%, and in 2012 number of air passengers has exceeded 77 million, both domestic and international. Looking at the growth in the number of passengers which is very promising, the airlines were bringing new aircrafts.

               

Secretary General of Indonesia National Air Carriers Association (INACA), Tengku Burhanuddin, in Jakarta on Monday (6/10), believed that the national airline industry will continue growing. Maintained economic growth at above 6% a year will boost people’s purchasing power. The airline industry will grow 2-2.5 times of economic growth. “We do not have an exact data, but flights in the Asia pacific region also grew at the same rate. Indonesia recorded the highest growth since its area consists of islands”, Tengku said.

               

Tengku believes that Indonesia is one of the key growths in air transport market. The reason is Indonesia has a population of more than 240 million people or the fourth largest in the world with geographical area in the form of islands. With such a large population, only 10% of the Indonesia population who are traveling by the commercial aircrafts. This is a very large market opportunity. Thus, airline competition is getting fiercer now as Indonesia’s middle class is growing at approximately 16%. The competition is not only in terms of price, but also quality.           

               

He is optimistic that airline industry n Indonesia will continue to increase in 2013. The development of airline industry In Indonesia is in line with many foreign airlines that enter Indonesia adding to the intensity of the domestic aviation market and also economic growth and increase of purchasing power of Indonesia society. With more affordable ticket prices and more varied options provided by airline operators, it makes more people to choose air transportation as a means of transport. This causes increase in domestic demand that will lead to many airlines vying to add their fleets.

               

According to him, a strategy that is very competitive in maintaining the current business is through a Law Cost Carrier (LC) segment or low-cost airline strategy and also providing full service for all customers. This is very effective in increasing number of passengers. In Indonesia, this industry is very promising. Growth in the number of passengers for Indonesia national airline is in the top 10 in the world and the highest in the Asia Pacific region. For the year 2013, it is estimated that the growth of air passengers in the world is only at 6% and in Asia Pacific 10%, while in Indonesia 20%.

               

He sees that this is because Indonesia is an archipelagic country with approximately 17,000 islands scattering along the equator. No wonder, air transportation is a mainstay in this country. It is said that the economic growth in Indonesia is a gold mine for the airlines in the fourth most populous country in the world. Airline business continues to grow in line with national economic growth which stays at above 6%. The ministry of transportation reported that there were 420 routes that have not been flown by national air carrier. Out of 670 routes available, only 250 routes that were flown. (E)

Business News - June 14,2013