One of the world’s largest budget carriers, Malaysia-based AirAsia Group, plans to list its Indonesian unit - Indonesia AirAsia - on the Indonesia Stock Exchange in mid-2016. AirAsia Group Chief Tony Fernandes said that the group is eager to expand its presence in Indonesia, one of the world’s fastest growing regions in terms of air passengers, and aims to raise USD $300 million through this initial public offering (IPO). The fatal crash of Indonesia AirAsia flight QZ8501 in the Java Sea in December 2014 did not dim the group’s ambitions.

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On 19 April 2015, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic matters such as an update on Bank Indonesia’s interest rate policy, the performance of the rupiah, the March trade balance, updates on coal, palm oil, cement and car sales, GDP growth forecast, alcohol in Indonesia, and more.

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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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Indonesian authorities said that divers have located the black box recorders of Indonesia AirAsia Flight QZ8501 on Sunday (11/01). Ships involved in the search operation picked up strong ping signals less than 0.6 miles from the location where the tail of the AirAsia aircraft was found. However, divers have not been able yet to collect the black box (which contains crucial flight data) due to the strong undercurrent. Moreover, the black box is stuck under debris at about 30 to 35 meters below sea level.

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Although Indonesian rescuers are still searching for the black boxes, casualties and other remains of Indonesia AirAsia Flight QZ8501 that crashed tragically in the Java Sea on 28 December 2014 en route from Surabaya (East Java) to Singapore, some preliminary findings have already been presented to the media. These findings do not involve the accident itself but rather involve massive violations that were exposed as a consequence of the AirAsia tragedy. Apparently, 61 flights (involving five Indonesian airlines) lack the necessary permits.

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Indonesia has suspended several officials in connection to the AirAsia Flight QZ8501 disaster after preliminary results of the investigation indicate that the AirAsia airplane was not authorized to fly on Sundays (hence detecting a flight schedule violation). The AirAsia plane went down in the Java Sea on Sunday 28 December 2014, en route from Surabaya (East Java) to Singapore, presumably killing all 162 people on board. Authorities have barred the airline from flying this route until the investigation is over.

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On Sunday 28 December 2014 an Indonesia AirAsia flight lost contact with Indonesian air traffic control en route from Surabaya (East Java) to Singapore. AirAsia flight QZ 8501, carrying 155 passengers and seven crew members, departed from Surabaya at 5:35 am local Surabaya time and lost contact above the Java Sea (between Java and Kalimantan) at 6:17 am local time. The Airbus A320-200 was supposed to land in Singapore at 08:30 am Singapore time.

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The Lion Group, parent to Indonesia’s largest privately held airline Lion Mentari Airlines (Lion Air), targets to raise IDR 10 trillion (USD $820 million) by selling a 30 percent stake through an initial public offering (IPO) on the Indonesia Stock Exchange (IDX) in 2016. If realized, this would be one of the largest IPOs on the IDX in recent years. Lion Group CEO Rusdi Kirana confirmed the company’s IPO plans earlier this week. Part of the proceeds will be used to develop a new airport in Lebak (Banten, West Java).

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Ahead of implementation of the ASEAN Single Aviation Market (ASAM) in 2015, it is important for Indonesia to improve infrastructure at (and around) airports, particularly the nation’s smaller airports, in order to be able to compete with other airports in the ASEAN region. ASAM will turn ASEAN into a unified and single aviation market by 2015, meaning that air travel between ASEAN member states is fully liberalized. As such, ASAM will supersede existing unilateral, bilateral and multilateral air services agreements between ASEAN members.

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Recently, the Indonesian government decided to raise the airfare price ceiling by ten percent in an effort to support local airlines. This measure is required as Indonesian airlines face financial difficulties due to the depreciating rupiah exchange rate and higher global fuel (avtur) price. However, airlines have become worried as the government also decided to remove its fuel surcharge policy (that was implemented in February 2014). This fuel surcharge also aimed at supporting local airlines amid rising fuel costs.

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As companies' financial results of 2013 slowly start to be released, two reports - so far - have raised eyebrows due to significant declines in net profit. These are publicly listed, but majority state-owned, airline Garuda Indonesia and fully state-owned electricity firm Perusahaan Listrik Negara (PLN). Both companies felt the impact of the sharply depreciating Indonesia rupiah exchange rate. The currency fell over 21 percent against the US dollar in 2013 due to capital outflows amid looming US tapering and current account deficit concerns.

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On Friday 10 January 2014, the government of Indonesia opened Halim Airport for scheduled commercial flights. Previously, the only airport that served these types of flights around Indonesia's capital city of Jakarta and surrounding towns was the Soekarno-Hatta International Airport (Soetta), located in Cengkareng (Banten). However, the amount of daily passengers at Soetta has exceeded its capacity. Based on data from Airports Council International, released in 2013, Soetta is the world's tenth busiest airport.

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Garuda Indonesia, the country's top-class airline, is planning to conduct a rights issue in the first quarter of 2014. Through this corporate action, which has already been approved by the shareholders, the state-controlled company aims to raise IDR 2 trillion (USD $162.6 million). For 2014, the airline plans to allocate IDR 4 trillion in capital expenditure (capex) for business expansion. About half of this amount should originate from funds generated through the rights issue.

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Although initially expected to start in 2015, the government announced that construction of the new Karawang airport (in West Java) may commence in 2014. The administrative process (including a spatial plan review) is near completion, thus clearing the way for the airport's groundbreaking. The Karawang International Airport, which is designed to have a passenger handling capacity of 70 million people per year, will be built on a 900 ha piece of land and is envisaged to relieve passenger and flight congestion at Soekarno-Hatta International Airport.

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After it was reported that Garuda Indonesia, Indonesia's state-controlled national air carrier, postponed its rights issue, the company stated that it highly doubts an initial public offering (IPO) of its subsidiary Garuda Maintenance Facility (GMF) AeroAsia on the Indonesia Stock Exchange (IDX) in 2013. The reason for this postponement is current lingering uncertainty that plagues emerging markets, including Indonesia, since May 2013. Uncertainty about the future of the Federal Reserve's quantitative easing program led to a large outflow of foreign funds.

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Garuda Indonesia, one of the major airlines in Indonesia, has announced to conduct a rights issue in October 2013. Through the rights issue, which involves the issuance of 10 percent of new shares, Garuda aims to reap USD $200 million. Garuda was a fully state-owned company before its initial public offering (IPO) in early 2011 when it released 30 percent of its shares. However, Indonesia's House of Representatives (DPR) had approved total public offering up to 40 percent. The remaining 10 percent is now offered through the rights issuance.

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Today, Indonesian private airline Lion Mentari Airlines (Lion Air) ordered a record-breaking 234 airplanes from France-based Airbus for a combined price of €18.4 billion (US $24 billion). This mega-purchase marks the aggressive expansion drift of the Indonesian low-cost airline. In November 2011, the company had already ordered 230 aircrafts from (Airbus competitor) Boeing for the combined price of USD $21.7 billion.

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The number of air passengers in Indonesia has increased significantly during the last decade, and turned the country in one of the fastest-growing air travel industries worldwide. Blessed with robust macro economic growth and a subsequent burgeoning middle class, Indonesians are increasingly using airplanes as means of transportation. It is estimated that in 2012 about 72.5 million people used air transport in Indonesia, a ten percent year-on-year increase.

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One of the industries that has been showing remarkable growth in recent years in Indonesia is the aviation industry. Blessed with robust macro economic growth and a burgeoning middle class, the country's population is increasingly using airplanes as means of transportation. Considering the magnitude of Indonesia, its island rich composition and underdeveloped road and rail network, air travel is an efficient option.

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