The existence of Indonesia’s airport business cannot be separated from the dynamics that occur in aviation businesses both in Indonesia and worldwide. IATA notes that Asia has four out of five countries in the world that experienced an increase in total passengers per year, namely China, India, Indonesia and Vietnam.
In this decade there is also a shift in airline trends along with consumer demand for aviation services. Along with the growing middle class economy both in Asia and Indonesia, this trend is driving more demand for Low Cost Carrier (LCC) services. In the Asian market, LCC airlines have successfully penetrated 31% of the total passengers transported in Asia, and the penetration of the LCC is predicted in the near future will beat European and North American markets that have been mature.
Viewed from the type of flight, flight activities are categorized into 2 parts, namely domestic flight and international flight. On domestic flights, along with the decline in world oil prices, this also affects the aviation fuel from aircraft and contribute 45-50% of the total cost component of air transport services. Given this condition, it can reduce the operational costs and air transport services effort to be efficient.
On international flights, despite the global economic slowdown that leads to significant growth declines in some countries, Indonesia has recorded a relatively strong inbound arrival in 2016. This is because the Indonesian government through the tourism ministry conducts sustainable marketing activities to increase tourist interest overseas to several destinations in Indonesia. This is also supported by the government’s policy on visa exemption entering the territory of Indonesia. It drives relatively good growth of inbound travel in Indonesia.
In the future, IATA estimates that in the Asia Pacific region, the aviation market will gain an additional 1.8 billion passengers per year by 2035. IATA also predicts that by the year of 2024, the total aviation market in China will replace the US position as the largest flight industry in the world. Meanwhile, India will replace UK as the third rank in the aviation market of the world in 2025. It is predicted also in 2025 that Indonesia will enter the top 10 of the world flight market.
Modern air transportation has become so important since effectiveness becomes a priority, yet cost is ignored. Comfort and time are two main concerns for Indonesian people in using air transport nowadays. For this developing situation and technological advances, air transport is an ideal choice.
GLOBAL AVIATION INDUSTRY
Based on the fact that market country keeps growing and new business model is developing, the customer base for a flight gets more variation. In 1995, European or North American flight dominated 64% from all global flight. While in 2035, the flight percentage of Europe or North America will decrease into 37% with Asia Pacific and the Middle East that become more dominate in global flight.
The strong economic growth in the level of 4.1 percent per year has exceeded the global average that is 2.9 percent. This condition is supported by China and India as the main engine of Asian area growth from world GDP which is projected to rise from 31 percent at present, into 38 percent in 2035. The significant growth rate in developing market is predicted to continue. For that reason, flight, airport capacity and passenger traffic are predicted to encounter strong growth rate in the next 20 years. The demand of commercial flight also derived from sustainable expansion from Asian middle class, in which the sector that is higher that the population reaches income level that enables a flight becomes more affordable.
The privilege of Asia in global flight is expected to be the leading aviation market in the world. Total air traffic of this area is predicted to grow approximately 6.0% and in 2035. Here, the passenger traffic in all around Asia will be 48.7% from the global passenger traffic. This condition is supported by a strong area development, economic, an effective industrial structure, and improvement of the accessibility of air transport services. There are more than 100 million new passengers are projected to enter the market every year.
Judging from the current condition and positive projection of aviation industry both in the world and Indonesia, the continuity of airport business in Indonesia in the future is still promising.
Indonesian article: Industri Penerbangan Indonesia dan Global