The Southeast-Asian region has officially entered the ASEAN open sky era. This era enables every ASEAN members ample of opportunities to expand their business operations, be it airlines, airport management authorities, ground handling, and air traffic control (ATC) businesses. Even though it has only been several months since the ASEAN open sky era commence, brewing competition amongst ASEAN members is already heart felt by Indonesians operating in the aviation and airport business.
Andre Rahadian, partner and co-founder of Hanifah Ponggawa and Partners (HPRP) law firm, explained that Indonesia should have anticipated the open sky policy before it was even implemented. If this was done, it would have been easier for us to compete and profit from this particular policy. Despite starting late in the game, Mr. Rahadian sees that there is still opportunities for Indonesian airlines, airport, and airport authorities to tackle the open sky policy. Accordingly, there is at least three aspects that need to be improved by the Indonesian aviation industry.
The first aspect regards to airlines business expansion, specifically domestic and international flight routes. Mr. Rahadian revealed that only one Indonesian airline had successfully expanded its international flight routes, such as the case of Lion Group who established Malindo airline in Malaysia and Thai Lion Air in Thailand. Other major airlines such as Sriwijaya and Garuda Group on the other hand, choose to strengthen their domestic flight routes.
“Our airlines must be ready to aim for higher goals. We can’t allow Indonesia to become just another marketplace due to the facts that she holds the largest territory and population among other ASEAN member,” asserted Mr. Rahadian.
Airport management which is the second aspect addressed by Mr. Rahadian, are exclusively hold by PT Angkasa Pura (a state-owned enterprise/BUMN) and Airport Organizing Units (UPBU), that is notorious with for inefficiencies due to monopoly. Airports’ safety and security standards is likely to be a formidable challenge on its own, specifically for primary airports that are incorporated into the ASEAN open sky policy, covering: Soekarno-Hatta International Airport, I Gusti Ngurah Rai International Airport, Juanda International Airport in Surabaya, Kualanamu International Airport in Medan, and so forth.
“If we add more flights without having sufficient infrastructures, the open sky era will just eat and burden the government. This all is dependent on how government deals with airports preparedness, be it managed by BUMN or UPBU,” asserted Mr. Rahadian.
Another issue on airports operational standards, there needs to be an adjustment to comply with the airport management standards applicable to all ASEAN airports. Scenarios such as airports over capacity or inability to provide competitive tariff in terms of rendering airport services, could be addressed by Indonesian airlines by channeling parts of airport’s operation (the so-called “hub”) to other airports in other jurisdiction. If ever would this situation occur, it would an irony knowing that Indonesia has geographical advantage and more airports than others.
The last aspect is the role and support of relevant authorities. According to Mr. Rahadian, the Ministry of Transportation, specifically the Directorate General of Air Transportation, has performed several important preparation for the ASEAN open sky policy. One of the major contribution are the full compliance to the International Civil Aviation Organization (ICAO) and the Federal Aviation Administration’s (FAA) audit.
Yet, several aspects need some improvement, such as navigation matters. Mr. Rahadian pin point improvements that needed to be done regards to radar technical limitations and radar for civilian-purpose. In a worst-case scenario, if no immediate improvements are taken, ICAO can transfer the right to manage Indonesia’s air traffic to another country. Keeping in mind that such action will be in violation of Article 271 of Law No. 1 of 2009 on Aviation (Aviation Law) that emphasize government’s authority to controls its airspace navigation.
According to the Aviation Law, we control our airspace navigation. However, if we are not diligent in developing the needed infrastructure that expands beyond 24,000 feet coverage, Australia can take over because it has the necessary infrastructure. The government must also integrate their western and eastern radar infrastructure. With many future flights crossing the Indonesian archipelago, and the opening of the northern flight route, there is the possibility of our radar and navigation system to overload. This in course will result in planes passing illegally without being noticed by the Indonesian airspace navigation authority (Indonesian Nav) which is a threat to Indonesia’s sovereignty, asserted Mr. Rahadian.
Commenting on this issue, Hendra Ong, a senior associate from HPRP law firm, reminded that liberalization under the ASEAN open sky policy are based upon two multilateral agreements, namely ASEAN Multilateral Agreement on Air Service (the 2009 MAAS) and ASEAN Multilateral Agreement on the Full Liberalization of Passenger Air Services (the 2010 MAFLPAS). These multilateral agreements, indulge the government to relax current legislations on market access and ownership to the national aviation industry as a result of implementing the open sky policy.
Emphasizing on ownership matters, Mr. Ong points Article 108 point (2) and (3) of the Aviation Law which states that foreign investment is not allowed to become majority shareholders to a airline company. Where according to the recent negative investment list regulated under Presidential Regulation No. 39 of 2014,ownership by foreign in the scheduled and non-scheduled commercial air transportation sector is capped at 49% [out of total ownership].
The Southeast-Asian region has officially entered the ASEAN open sky era. This era enables every ASEAN members ample of opportunities to expand their business operations, be it airlines, airport management authorities, ground handling, and air traffic control (ATC) businesses. Even though it has only been several months since the ASEAN open sky era commence, brewing competition amongst ASEAN members is already heart felt by Indonesians operating in the aviation and airport business.
Andre Rahadian, partner and co-founder of Hanifah Ponggawa and Partners (HPRP) law firm, explained that Indonesia should have anticipated the open sky policy before it was even implemented. If this was done, it would have been easier for us to compete and profit from this particular policy. Despite starting late in the game, Mr. Rahadian sees that there is still opportunities for Indonesian airlines, airport, and airport authorities to tackle the open sky policy. Accordingly, there is at least three aspects that need to be improved by the Indonesian aviation industry.
The first aspect regards to airlines business expansion, specifically domestic and international flight routes. Mr. Rahadian revealed that only one Indonesian airline had successfully expanded its international flight routes, such as the case of Lion Group who established Malindo airline in Malaysia and Thai Lion Air in Thailand. Other major airlines such as Sriwijaya and Garuda Group on the other hand, choose to strengthen their domestic flight routes.
“Our airlines must be ready to aim for higher goals. We can’t allow Indonesia to become just another marketplace due to the facts that she holds the largest territory and population among other ASEAN member,” asserted Mr. Rahadian.
Airport management which is the second aspect addressed by Mr. Rahadian, are exclusively hold by PT Angkasa Pura (a state-owned enterprise/BUMN) and Airport Organizing Units (UPBU), that is notorious with for inefficiencies due to monopoly. Airports’ safety and security standards is likely to be a formidable challenge on its own, specifically for primary airports that are incorporated into the ASEAN open sky policy, covering: Soekarno-Hatta International Airport, I Gusti Ngurah Rai International Airport, Juanda International Airport in Surabaya, Kualanamu International Airport in Medan, and so forth.
“If we add more flights without having sufficient infrastructures, the open sky era will just eat and burden the government. This all is dependent on how government deals with airports preparedness, be it managed by BUMN or UPBU,” asserted Mr. Rahadian.
Another issue on airports operational standards, there needs to be an adjustment to comply with the airport management standards applicable to all ASEAN airports. Scenarios such as airports over capacity or inability to provide competitive tariff in terms of rendering airport services, could be addressed by Indonesian airlines by channeling parts of airport’s operation (the so-called “hub”) to other airports in other jurisdiction. If ever would this situation occur, it would an irony knowing that Indonesia has geographical advantage and more airports than others.
The last aspect is the role and support of relevant authorities. According to Mr. Rahadian, the Ministry of Transportation, specifically the Directorate General of Air Transportation, has performed several important preparation for the ASEAN open sky policy. One of the major contribution are the full compliance to the International Civil Aviation Organization (ICAO) and the Federal Aviation Administration’s (FAA) audit.
Yet, several aspects need some improvement, such as navigation matters. Mr. Rahadian pin point improvements that needed to be done regards to radar technical limitations and radar for civilian-purpose. In a worst-case scenario, if no immediate improvements are taken, ICAO can transfer the right to manage Indonesia’s air traffic to another country. Keeping in mind that such action will be in violation of Article 271 of Law No. 1 of 2009 on Aviation (Aviation Law) that emphasize government’s authority to controls its airspace navigation.
According to the Aviation Law, we control our airspace navigation. However, if we are not diligent in developing the needed infrastructure that expands beyond 24,000 feet coverage, Australia can take over because it has the necessary infrastructure. The government must also integrate their western and eastern radar infrastructure. With many future flights crossing the Indonesian archipelago, and the opening of the northern flight route, there is the possibility of our radar and navigation system to overload. This in course will result in planes passing illegally without being noticed by the Indonesian airspace navigation authority (Indonesian Nav) which is a threat to Indonesia’s sovereignty, asserted Mr. Rahadian.
Commenting on this issue, Hendra Ong, a senior associate from HPRP law firm, reminded that liberalization under the ASEAN open sky policy are based upon two multilateral agreements, namely ASEAN Multilateral Agreement on Air Service (the 2009 MAAS) and ASEAN Multilateral Agreement on the Full Liberalization of Passenger Air Services (the 2010 MAFLPAS). These multilateral agreements, indulge the government to relax current legislations on market access and ownership to the national aviation industry as a result of implementing the open sky policy.
Emphasizing on ownership matters, Mr. Ong points Article 108 point (2) and (3) of the Aviation Law which states that foreign investment is not allowed to become majority shareholders to a airline company. Where according to the recent negative investment list regulated under Presidential Regulation No. 39 of 2014,ownership by foreign in the scheduled and non-scheduled commercial air transportation sector is capped at 49% [out of total ownership].