Overview

Unit: USD millions

Data Sources: Indonesian Central Bureau of Statistics, Global Trade Atlas, UN Comtrade Analytics, and unofficial estimates. Average exchange rate of Indonesian rupiah to U.S. dollars from the World Bank

Leading Sub-Sectors

The Indonesian aviation sector offers significant opportunities due to it being the largest in Southeast Asia, as Indonesia’s population comprises of 41% of Southeast Asia’s total population. Indonesia is the second-fastest growing aviation market in the world after China based on its aircraft purchases and trade value. Due to Indonesia being an archipelago comprising more than 17,000 islands, air travel is necessary for the mobility of both people and goods. Current challenges include a lack of infrastructure for the rapid development of the aviation industry as well as the government’s management of its human resources to meet market demands.

The domestic aviation industry was hit hard during the COVID-19 pandemic. According to Indonesian National Air Carriers Association (INACA), Indonesia’s aviation industry continues to recover as passengers’ figures have reached 80 percent of the pre-pandemic level. Airlines are confident about the demand trajectory after air travel picked up rapidly. Data from the Indonesian Bureau Statistics (BPS) recorded 7.1 million international airline passengers and 52.6 million domestic passengers, an increase of 1,030.86 percent and 74.81 percent respectively from the previously year.

Currently, Indonesia has 683 airports, with 35 of them being commercial airports managed by State-Owned Enterprise PT, known as Angkasa Pura I (AP I) and Angkasa Pura II (AP II). Angkasa Pura I, operates 15 airports mainly in Eastern Indonesia, recorded that it had served 6,245,286 passenger movements throughout May 2023, or experienced growth of 27% compared to the May 2022 period which reached 4,921,407 passenger movements. The number of passenger movements for the period May 2023 is also the highest monthly passenger movement figure since the global Covid-19 pandemic period which began in March 2020. Growth also occurred in the number of aircraft movements with a total of 49,865 movements, or a growth of 4% compared to aircraft movements in May 2022 which were 48,177 movements. API was serving 26,973,511 passenger movements from January to May 2023.  This number experienced growth of 49% compared to the number of passenger movements in the same period in 2022 which reached 18,125,688 passenger movements.  Meanwhile, for cargo movements, 15 Angkasa Pura Airports served 464,326 tons of cargo, and experienced growth of 7% compared to the number of cargo movements in 2021 which was 433,887 tons of cargo.

PT Angkasa Pura II, which operates many airports in Western Indonesia, recorded that the number of passenger movements at 20 airports managed by AP II in the first quarter of 2023 reached 18.2 million people, both domestic and international. This figure is up 53.58 percent compared to the first quarter of 2022. Passenger movements during January-March 2023 were also around 12 percent higher than initial estimates. Meanwhile, in the first quarter of 2023, the cumulative number of aircraft movements at 20 AP II airports also increased by around 30 percent to 140,800 flights. The domestic cargo market at PT Angkasa Pura II airport continues to be enthusiastic despite facing the challenges of the COVID-19 pandemic. Throughout 2020 - 2022, the volume of domestic cargo transportation at AP II airport continues to soar. In 2020, when the COVID-19 pandemic hit, the volume of domestic cargo transportation at 20 AP II airports was cumulatively recorded at 427,948 tons, an increase of 5.27% compared to 2019 when normal conditions had not occurred, which was 406,494 tons. Then in 2021 the volume of domestic cargo transportation was 546,237 tons or an increase of 27.64% compared to 2020. Meanwhile, throughout January - October 2022 the volume of domestic cargo reached 461,102 tons or an increase of 2.91% compared to January - October 2021.

Opportunities

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

Resources

Directorate General of Civil Aviation, Ministry of Transportation, https://hubud.dephub.go.id/hubud/website/

AirNav Indonesia https://www.airnavindonesia.co.id/

Indonesian National Air Carriers Association (INACA) https://inaca.or.id/

International Air Transport Association (IATA) https://www.iata.org/

International Civil Aviation Organization (ICAO) https://www.icao.int/Pages/default.aspx