No foreign airline is planning to operate domestic routes in Indonesia, said Air Transportation Director-General Polana Pramesti according to a report by news site Tempo.
This came after President Joko Widodo’s proposal to allow foreign airlines to operate Indonesian domestic routes with the aim of bringing down ticket prices sparked a robust debate among stakeholders.
“There is none (that are planning to operate in Indonesia) because of strict requirements,” said Mr Polana during an interview last Saturday (Jun 8). He was responding to questions on the operation of international airlines such as Jetstar and Scoot.
Citing the relevant law and presidential decree, the director-general explained that any airline wanting to operate in Indonesia should set up a domestic business entity, with the majority shareholder – holding a minimum of 51 per cent shares – being Indonesian.
The airline must also operate 10 aircraft for scheduled transportation. “They should possess five aircraft and the rest must be aircraft leases,” he said.
“As long as the law is not revoked yet and presidential decree is not amended yet, we still uphold it.”
Mr Widodo’s proposal is now being studied by the transportation ministry.
Meanwhile, the business community has noted that this would boost competition and eventually benefit the tourism industry.
“I think it would be very helpful if foreign airlines enter Indonesia, it would create competition and improve efficiency,” Indonesian Chambers of Commerce and Industry chairman Rosan Perkasa Roeslani said last week.
Others, however, such as University of Indonesia international law expert Professor Hikmahanto Juwana say local airlines may be squeezed out.