Tourism is a vital part of the Indonesian economy. We can illustrate this by taking a look at Indonesia’s biggest foreign exchange earners (referring to those sectors that attract most foreign currency).

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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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Low cost carrier Indonesia AirAsia, the Indonesian unit of Malaysia's AirAsia, carried 4.08 million air passengers in the first half of 2014, a growth of 12 percent from the same period last year (3.64 million passengers). However, this growth figure failed to achieve the company’s initial target as it had to reduce flights and routes in an effort to cut back on expenses amid high operational costs. Although the firm managed to pass on part of expensive fuel costs to passengers (fuel surcharge), operational costs for specific routes are high.

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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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