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Indonesia: unique opportunity within Asia
South East Asia GDP Forecasts
Most populous country in the South East Asia (4th largest in the world)
with people distributed across a number of medium - large cities and GDP per
capita(1) 2,224 1,052 34,346 1,721 1,052 7,469
high density provinces
(US$)
(%)
High growth economy with GDP per capita showing a growth of 12% in
the period 2000 – 2009
Kuala Lumpur
1.6 million
Petaling
1.5 million (1) 2009 estimates
Source: IMF, World Economic Outlook (WEO), 2009
Medan
2.0 million Singapore
4.6 million
Jarkarta
8.0 million
Bandung
4.0 million Source: IMF, World Economic Outlook (WEO), 2009
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Indonesia: tourism to be a likely major driver for air-traffic going forward
36.9
4.4 12.6
Government’s emphasis on inbound tourism market
23.3 likely to drive faster growth in the future
6.3
15.2 5.1
13.1
1.3
6.3 Growing affluence among Indonesian residents would
3.8
provide a boost to outbound tourism
Malaysia Singapore Thailand Indonesia Vietnam
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Aviation Industry: Indonesia to register tremendous growth
52.2 52.1
50.0
40.0
43.5
39.1 37.4
30.0
20.0
10.0
14.7 15.9
13.1
-
2007 2008 2009
Domestic International
International
Source: Company Domestic Source: Euromonitor
One of the fastest growing airline markets in Asia Largely underpenetrated market with significant
potential for growth
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Aviation Industry: Asia to lead would traffic growth
In 2009, Asia-Pacific overtook North America to become the largest air travel market with 647 million passengers and
is expected to grow more rapidly than that of the rest of the world, with an average annual growth rate of 6.5%
between 2009 and 2028
% of 2028 world RPKs: 20% % of 2028 world RPKs: 26% % of 2028 world RPKs: 4%
Middle
East
Latin America Middle East Asia Pacific
Latin 20-year 20-year 20-year
2009-2018 2019-2028 2009-2018 2019-2028 2009-2018 2019-2028
America growth growth growth
Africa Africa
20-year
2009-2018 2019-2028
growth
2008 traffic 2009 - 2028 growth
5.4% 5.1% 5.2%
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Indonesia (Domestic) Market & Forecast
6 6
Domestic market overview
70
Premium Middle Budget Traveler
60
50
40
30
20
10
0
2006 2007 2008 2009 2010 2011 2012 2013 2014
7
International market overview
(in/out Indonesia)
Market Size (mio)
25 60
40
15
30
10
20
5
10
0 0
2006 2007 2008 2009 2010 2011 2012 2013 2014
• The growth of International market in 2008 are increased by 10% however slowdown to 5%
in 2009. Projected the annual market growth from 2008 to 2013 is 6.0%
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Tourism Forecasts
Forecast of Number of Tourists Visiting Indonesia
• Tourism forecasts show modest 2010 - 2014
growth
Year Pessimist Moderate Optimist
• Growth potential expected to be
driven by a mixture of European,
Asian and Australasian markets 2010 6,421,665 6,759,647 7,097,630
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Contents
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Airlines Perspective Related
to the ASEAN Open Sky
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Open Sky
Open Sky is a bilateral or multilateral agreement
within two or more countries
which allows foreign airlines to operate
international routes above other countries
regions
without any limitation on routes, frequencies,
capacities and other airlines restrictions
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General Impacts on Airline Industry
Under Open Sky
13
ASEAN Open Sky (AOS)
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European vs ASEAN Open SKY
European ASEAN
Liberalization in Europe was ASEAN doesn’t have a central
decided upon by a judge in a court
central court
European airports are highly Most ASEAN countries would not
overcrowded and have slot face that kind of difficulty
capacities that need to be
addressed in the transition
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National Airlines SWOT
Strengths
• Indonesia has many tourism objects which seen interesting not
only by domestic but also international tourists
• Large numbers of Indonesian Populations
• National Airlines Commitment to enlarge number of fleet
• Government arrangement for the continuity of “Visit Indonesia”
program
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National Airlines SWOT
Weaknesses
• According to Federal Aviation Administration (FAA), published 8th June 2009 International
Aviation Safety Assessment Program (IASA) result shows Indonesian appointed on 2nd
category, which means “insecure”
• Masyarakat Transportasi Indonesia (MTI) evaluation on 16 Indonesian airlines reveals that
most of them only achieve 30%-50% of OTP (On Time Performance). These figures are far
less than IATA standard , which is 70%.
• Weak national airlines competitiveness compared to foreign airlines
• Limitations of Qualified Pilots and Cabin Crews
• Weak economic infrastructure. Since Airlines now rely heavily on telecommunication for their
information system and to market and conduct operations
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National Airlines SWOT
Opportunities
Nevertheless, Indonesia should perceive AOS as the opportunity to
expand its airline industry globally . Therefore;
• National airlines will gain additional profits from obtaining increased
market access
• Leads to improvements on national airlines services and productivities
• Forces national airlines build agreement among them to enhance their
business competitiveness against foreign airlines
• Drives national airlines agreements with foreign airlines to expand
service networks
• Opportunity for national airlines to develop or boost their HUB
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National Airlines SWOT
Threats
• More capacity between the countries will lead to more intense competition
and pressure to low fares
• There is no longer fair competition
• Domestic passengers prefer foreign airlines instead of national airlines, due to
their credibility and reliabilities
• Lack of competition policy
19
International Air Transport Capacities
National Airlines (Per December 2009)
2. Merpati 2 2 14 3.752
3. Lion 4 4 61 25.906
4. Batavia 4 4 24 8.536
7. Kalstar 1 1 7 672
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International Air Transport Capacities
ASEAN Airlines
Per December 2009
AIRLINES Cities in
Indonesia
RUTE FREQUENCIES /
week
CAPACITIES /
week
1. SQ 2 2 119 77.826
2. Malaysian A/S 4 4 67 24.772
3. Thai A/W 2 2 14 8.540
4. Royal Brunei 2 2 12 5.346
5. Philippines A/L 1 1 7 3.352
6. Vietnam A/L 1 1 7 1.673
7. AirAsia (MAL) 12 13 127 44.280
8. Firefly (MAL) 4 5 23 4.320
9. Tiger A/W (SIN) 2 2 17 3.240
10. Value Air (SIN) 4 4 43 13.932
11. Silk Air (SIN) 7 7 50 12.736
12. Cebu Pacific (Phil) 1 1 3 1.074
13. Thai AirAsia (Thai) 1 1 7 2.520
Source: Indonesian Ministry of
Transportation
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Additional Facts of Open Sky
From the 26 international airports, Indonesia has prepared its 5 international
airports available for Open Sky. There are:
1.Soekarno-Hatta (Jakarta)
2.Kualanamu (Medan)
3.Juanda (Surabaya)
4.Ngurah Rai (Bali)
5.Hasanuddin (Makasar)
Hang Nadim (Batam), Sam Ratulangi (Manado) and Frans Kaisiepo (Biak)
airports have been appointed for Open sky Cargo, along with the four
airports which are still proposed for Open Sky
On March 30 ’08 Open Sky agreement between Europe and US had been
settled. Allows airlines based in Europe and US to fly between any two
airports in each region
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ASEAN (Regional) MES – Sumatera & kep
ASEAN
Indonesia Hub
International
Route
Several Competition Issues arise from
Open Sky
Merger and Strategic Alliances: Firms avoided competition by merging, or
by forming strategic alliances to increase efficiency and product mix
Collusive Behaviors and Price Fixing: Airlines might agree to fix prices,
keeping them high, instead of competing between themselves as well as the
existence of market sharing; agreement so serve different market, and not
compete one to another
Predator Behavior: Imbalance competitive strengths of the different airlines.
Established, experienced, financially secure and profitable airlines vs small
or new entrant airlines
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Thank you
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