In yesterday's cabinet reshuffle Budi Karya Sumadi replaced Ignasius Jonan as Indonesia's new transportation minister. Sumadi is instructed by President Joko Widodo to improve Indonesia's connectivity - on land, sea and air - with the aim to empower the people. Currently, Indonesia is still plagued by weak connectivity, mainly due to the lack of quality and quantity of infrastructure as well as weak public transportation services. If these issues are improved, then businesses will become more competitive on lower logistics costs, while people's access to healthcare services improves.

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The Indonesia National Air Carriers Association (INACA) expects the number of air passengers in Indonesia to grow 15 percent (y/y) in full-year 2016, roughly the same as growth realization one year earlier. In the first five months of 2016 there were a total of 37.38 million air passengers - both domestic and international flights - in Indonesia, up 16 percent (y/y) from the number of air passengers in the same period last year. INACA added that the Idul Fitri holiday period will not be able to boost total passengers significantly due to limited slot times.

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Asosiasi Perusahaan Penerbangan Nasional Indonesia (Indonesia National Air Carrier Association/INACA) memprediksi penumpang pesawat udara domestik dan internasional di Indonesia akan bertumbuh kira-kira 8-9% pada basis year-on-year (y/y) di tahun 2016, rata dari laju pertumbuhan yang diperkirakan tahun ini (8% y/y). Berdasarkan pada data terakhir dari Badan Pusat Statistik (BPS), penumpang pesawat udara di Indonesia mencapai 67,5 juta orang pada 10 bulan pertama di tahun 2015, naik 12,8% dari jumlah penumpang pesawat udara di periode yang sama tahun lalu.

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Small Indonesian airlines face difficult times ahead of the implementation of a new law (UU No. 1 2009 on Aviation) which stipulates that per 1 July 2015 all Indonesian airlines have to operate at least ten aircraft. Of this ten airplanes, at least five aircraft have to be owned by the airline, while the remainder can be leased. The Indonesian government emphasized that if domestic airlines fail to comply with the new law per July 2015, then their flight permits will be revoked.

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Ticket sales of domestic low-cost carriers in Indonesia have declined up to 20 percent after the Transportation Ministry implemented new (higher) surcharge fees for airline tickets on 26 February 2014. The new fuel surcharge was needed to offset the negative influence of sharp rupiah depreciation in 2013, which led to rising jet fuel prices, as well as low passenger rates amid the current low season. The Indonesia National Air Carrier Association (INACA) had previously requested for the new surcharge as Indonesia's aviation industry was in jeopardy.

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In 2017 Indonesia's Transportation Ministry allowed the opening of 83 new flight routes (commercial civil flights), consisting of 58 domestic routes and 25 international routes. There are two reasons why the government encourages the opening of new routes: (1) to make the remote areas of Indonesia less isolated, and (2) to strengthen inter & intra regional transportation.

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The number of air passengers in Indonesia will most likely fail to meet its growth target in 2014. Based on government data, the number of air passengers in Southeast Asia’s largest economy reached 47.5 million in the first eight months of 2014, a 5.82 percentage point growth from the same period last year. However, the Indonesia National Air Carrier Association (INACA) initially targeted annual passenger growth in the range of 12-15 percent for 2014. Amid slowing economic growth, people’s purchasing power has declined.

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