Is Indonesia a Good Place for Aviation Businesses?

Welcome back, fellow aviation enthusiasts! If you missed out on the first instalment of this miniseries, I’ve got an article on my profile on the Malaysian aviation market. For my last article of 2019, we’ll take a look at the aviation market in Indonesia, especially known for their dynamic domestic market.

 Why Indonesia?

 Being the largest archipelagic country in the world – spanning over 5000 kilometres wide – with more than 13,000 islands, Indonesia relies heavily on air travel (especially now that air travel is more favourable than sea travel, thanks to the rise of low-cost carriers). Since 2006, the Indonesian domestic market has increased in size by more than 300%. To put things in perspective, this ASEAN country is positioned as the world’s fifth largest domestic aviation market.

 Apart from its geographical qualities that call for a large volume of air travel, Indonesia is the fourth most populous country in the world. With close to 270 million people, there’s no surprise that the country presents a large market for aviation businesses.

 Another aspect of the aviation market that Indonesia is famous for is their capabilities for complex aircraft manufacturing. It is the only Southeast Asian country with such complex capabilities, as other neighbouring countries tend to focus more on maintenance, repair and overhaul, and parts manufacturing. Indonesia has two thriving aircraft makers, one of which has produced over 60 aircraft that have been exported to Thailand, Senegal and South Korea; the other has received close to 150 aircraft orders from local airlines.

 Additionally, the decision by the Indonesian government to move the capital to the East of the country means potentially more air traffic due to the vast distances. This would increase the need for more MRO supporting services, to cater to this growth in time to come.

 Issues and Limitations in Indonesia

 Despite being the largest aviation market in the ASEAN region, Indonesia has not lent their full participation to the ASEAN Single Aviation Market. This remains a barrier to achieving regulatory harmonization and seamless regional collaboration.

 Another limitation to growth in Indonesia, as identified by CAPA Centre for Aviation, is the nation’s relatively slow economic growth, relative to other ASEAN member countries. There was also political instability a few years back, which could have stunted growth.

 In a commentary by Channel News Asia dated 21st July 2019, it stated that some of the challenges faced by the Indonesian aviation market include “… a lack of supporting industries, and inadequate human resources, such as technicians and aircraft maintenance experts”. A comment was also made regarding the country’s notoriety for poor aviation safety.

 How Can We Address These Issues?

 In my opinion, to overcome to challenge of poor aviation safety, we need to start at the grassroots. While regulations and proper enforcement are crucial in ensuring a high standard of aviation safety, those are often beyond the control of aviation businesses. However, what we, as industry players, can do is to focus on high-quality training. By having aviation personnel who are well-trained, with high levels of expertise, we can eliminate the issue of incompetency, and therefore, threats to safety.

 Through Dviation's training arm, DITO, we aim to play our part in building a pool of highly qualified aircraft maintenance personnel for the market within and beyond Indonesia. In addition, we have established line maintenance services in West Indonesia, and are employing locals, using this as a training go-around.

 As mentioned in my previous article in this miniseries, to tackle such challenges, we should continue to support the call for regulatory harmonization throughout the region. This can enable all ASEAN countries to be involved in the aviation industry on a level playing field, providing opportunities of collaboration and growth for aviation businesses. As mentioned above, each ASEAN country has a different pace of growth – but with harmonization, we can help one another achieve the common goal of raising the standards of Southeast Asian aviation in the global market.

I look forward to hearing your thoughts and last but not least, here's wishing everyone a Very Happy New Year filled with joy, prosperity and love for all mankind!