Indonesia ponders over allowing foreign airlines to fly domestic routes

Indonesia Ponders Over Allowing Foreign Airlines To Fly Domestic Routes

Indonesia’s president Joko Widodo has made a proposal for a new aviation policy that would allow foreign carriers to serve domestic routes across the archipelago. The proposal marks the latest in a string of state measures aimed at boosting competition, including changes to airfare floors and ceilings.

The move furthers Jokowi’s efforts to shake up Indonesia’s domestic market, now dominated by two large airline groups: national flag carrier Garuda Indonesia and low-cost carrier Lion Air. Combined, the two operators control eight Indonesian airlines, accounting for roughly 95 per cent of the domestic market.

The Garuda group comprises of Garuda Indonesia, Citilink, Sriwijaya and Nam Air, while the Lion Air group consists of Lion Air, Malindo Air, Wings Air and Batik Air.

Asia’s largest budget carrier, AirAsia, remains the only foreign operator, but operating from an Indonesian unit.

In recent months, Garuda and its units have come under fire amid allegations of price fixing, prompting Indonesia’s Business Competition Supervisory Commission to launch an investigation in February into a possible air ticketing cartel. In March, local media reported that major travel agencies faced pressure from Garuda and Lion Air to stop selling AirAsia Indonesia flight tickets.

The Indonesian Hotel and Restaurant Association (PHRI) welcomed Widodod’s proposal and encouraged the Indonesian government to apply the open sky system.

Hariyadi Sukamdani, chairman of PHRI, acknowledged that the skyrocketing prices recently experienced in the airline ticketing business was caused by the lack of competition in Indonesia’s aviation industry. As a solution, he suggested that the Indonesian government cooperate with foreign airlines, allowing them to expand their business into Indonesia.

“We had proposed to the government to allow regional airlines to enter Indonesia to add more domestic routes. It could be Jetstar, AirAsia or other airlines, so this is certainly good news,” Hariyadi added.

Rosan Perkasa Roeslani, Chairman of the Indonesian Chambers of Commerce and Industry (Kadin), also praised Widodo’s proposition to open the airspace.

“I think it would be very helpful if foreign airlines enter Indonesia, it would create competition and improve efficiency,” Rosan said.

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Indonesia’s president Joko Widodo has made a proposal for a new aviation policy that would allow foreign carriers to serve domestic routes across the archipelago. The proposal marks the latest in a string of state measures aimed at boosting competition, including changes to airfare floors and ceilings. The move furthers Jokowi’s efforts to shake up Indonesia’s domestic market, now dominated by two large airline groups: national flag carrier Garuda Indonesia and low-cost carrier Lion Air. Combined, the two operators control eight Indonesian airlines, accounting for roughly 95 per cent of the domestic market. The Garuda group comprises of Garuda Indonesia,...

Indonesia Ponders Over Allowing Foreign Airlines To Fly Domestic Routes

Indonesia’s president Joko Widodo has made a proposal for a new aviation policy that would allow foreign carriers to serve domestic routes across the archipelago. The proposal marks the latest in a string of state measures aimed at boosting competition, including changes to airfare floors and ceilings.

The move furthers Jokowi’s efforts to shake up Indonesia’s domestic market, now dominated by two large airline groups: national flag carrier Garuda Indonesia and low-cost carrier Lion Air. Combined, the two operators control eight Indonesian airlines, accounting for roughly 95 per cent of the domestic market.

The Garuda group comprises of Garuda Indonesia, Citilink, Sriwijaya and Nam Air, while the Lion Air group consists of Lion Air, Malindo Air, Wings Air and Batik Air.

Asia’s largest budget carrier, AirAsia, remains the only foreign operator, but operating from an Indonesian unit.

In recent months, Garuda and its units have come under fire amid allegations of price fixing, prompting Indonesia’s Business Competition Supervisory Commission to launch an investigation in February into a possible air ticketing cartel. In March, local media reported that major travel agencies faced pressure from Garuda and Lion Air to stop selling AirAsia Indonesia flight tickets.

The Indonesian Hotel and Restaurant Association (PHRI) welcomed Widodod’s proposal and encouraged the Indonesian government to apply the open sky system.

Hariyadi Sukamdani, chairman of PHRI, acknowledged that the skyrocketing prices recently experienced in the airline ticketing business was caused by the lack of competition in Indonesia’s aviation industry. As a solution, he suggested that the Indonesian government cooperate with foreign airlines, allowing them to expand their business into Indonesia.

“We had proposed to the government to allow regional airlines to enter Indonesia to add more domestic routes. It could be Jetstar, AirAsia or other airlines, so this is certainly good news,” Hariyadi added.

Rosan Perkasa Roeslani, Chairman of the Indonesian Chambers of Commerce and Industry (Kadin), also praised Widodo’s proposition to open the airspace.

“I think it would be very helpful if foreign airlines enter Indonesia, it would create competition and improve efficiency,” Rosan said.

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