Draft Final Technical Report
Presentation to Stakeholders: 19 May, 2011 by Mott MacDonald
ASEAN Open Sky Policy Stage II
Agenda
Time
Minutes
Topic
Person in Charge
10:00 – 10:30
30
Registration
Reception
10:30 – 10:35
5
Introduction
DGCA/IndII & Mr Whittle
10:35 – 10:50
15
Summary & Overall
Conclusions
Mr Whittle
10:50 – 11:00
10
Methodology &
Stakeholders
Mr Whittle
11:00 – 11:25
25
Policy & Regulation
Mr O’Donovan
11:25 – 11:50
25
Demand Forecasts
Mr Folley
11:50 – 12:15
25
Airlines
Mr Whittle
12:15 – 12:40
25
Airspace
LFV
12:40 – 13:05
25
Airports
Mr Whittle
13:05 – 13:30
25
Social & Economic Impact
Ms Congdon
13:30 – 13:40
10
Implementation
Mr Whittle
13:40 – 13:45
5
Closing Remarks
Mr Whittle
13:45 – 15:00
75
Question & Answer
Session
Moderator
2
Goal and Objectives
Study Goal
• To contribute to the long term development of Indonesia by producing a
strategy for the implementation of a regional (ASEAN) Open Sky policy in
2015 (planned date).
Activity Objectives
Accommodate ASEAN Open Sky policy in national aviation law;
Prepare the national aviation industry for regional competition;
Assess the benefits of ASEAN Open Sky policy for Indonesia (macro level);
Deliverable
• Road map for the development and implementation of the ASEAN Open
Sky Policy in Indonesia in 2015 (planned date).
• The road map will include steps to be taken by the “implementers”,
including the government, carriers and airport operators.
3
Description of Activity Components
Figure 1 : Interdependence of the tasks
4
Conclusions &
Recommendations
5
Aviation & Competition Law
• Aviation law
• The 2009 Aviation Law requires:
• Limited amendment to ensure consistency with ASEAN
multilaterals
• More detailed amendment in relation to the economic
licensing of air carriers where appropriate secondary
legislation and policies should be developed
• Competition law
• General reform of the 1999 law should follow the
adoption in 2010 of the comprehensive ASEAN Regional
Guidelines on Competition Policy.
• Guidelines for aviation cases should be developed.
6
Demand Forecasts & Open Skies Benefit (2025)
2010
2025
AAGR
Indonesia
Domestic Passengers (mn)
87
255
7.5%
Indonesia
International Passengers (mn)
19
67
8.9%
Indonesia
Domestic Aircraft Movements (000)
781
1,848
5.9%
Indonesia
International Aircraft Movements (000)
127
390
7.8%
Indonesia
Domestic Air Cargo (tons 000)
480
2,070
10.2%
Indonesia
International Air Cargo (tons 000)
286
1,380
11.1%
Jakarta
Domestic Passengers (mn)
32
107
8.4%
Jakarta
International Passengers (mn)
10
37
9.5%
Jakarta
Domestic Aircraft Movements (000)
247
679
7.0%
Jakarta
International Aircraft Movements (000)
62
202
8.2%
• Impact of Open Skies to Indonesia in 2025:
– 16.3m additional annual passengers
– 35,495 annual aircraft movements
– 291,000 annual tonnes of air cargo
7
Airlines
• Most Indonesian carriers consider profitable
growth will come from domestic expansion.
• Seek to delay international route access and
capacity expansion until domestic growth has
matured.
• Most Indonesian airlines would prefer gradual
introduction of an Open Sky Agreement across
Indonesia to ASEAN markets.
• Gradual removal of capacity and frequency
constraints currently applying on a bilateral basis,
to concentrate on securing domestic growth in the
short to medium term.
8
Airports
• The most urgent need for new capacity is at
Jakarta, Surabaya and Bali airports.
• It is easier to “sweat” terminal facilities than
airfield facilities.
• Surface access is likely to be a major issue at all
airports due to a lack of adequate rail and road
access.
• Land use Master Plans should be developed based
on the shortfalls in requirements highlighted in
this presentation.
• DGCA should formulate and recommend a defined
policy based on international best practice for
safety and security.
9
Airspace
• Implementation of Open Sky:
• No need for route structure changes
• Overall traffic increase:
•
•
•
•
•
•
•
Capacity enhancements
Update infrastructure
New ATM system in Jakarta ACC
Update of Ujung Pandang ACC
New sectorisation
Additional Air Traffic Controllers needed
Monitor and evaluate the ATM performance
10
Economic & Social Impact
•
Benefits from implementation of ASEAN Open Skies likely to
significantly outweigh the costs, in terms of capital costs and any lost
profits for Indonesian carriers.
•
Net flow of costs and benefits to Indonesian users is positive. NPV of
IDR 21.9 trillion and BCR of 5.4.
•
Majority of benefits will accrue to Jakarta and to a lesser extent
Indonesia’s other larger airports (these airports experience the
largest impacts in terms of demand growth).
•
Need for better understanding of linkage between air service
development and economic growth, informed by more in depth
analysis to support policy development.
•
Benefits could be even greater in regional economic development
terms, by extending the scope of Open Skies to include more
gateways and to achieve greater synergy with the strategy for
development focussed on six Economic Corridors.
•
To support modernisation of the Indonesian economy and assist with
the aim of Indonesia raising its economic status globally, strong case
for a more liberal approach to be taken towards the development of
air services with other world regions.
11
Implementation
12
Immediate Action Plan - (1)
• Aviation Law
– Work should start on the Law this year: requirement for
proposals, consultation , finalisation and the legislative
process. Plan to complete the process within 18 months to
two years.
• Airlines
– Airlines need to be aware of the change to policy that the
ASEAN Open Sky Agreement will bring - an important stepchange that needs to be factored into strategic planning.
– Meet ICAO compliance requirements - a number of carriers
need to work with international organisations to be
removed from blacklists.
– Develop distribution model for direct/web selling (Call
centre, online payments, mobile phone payment)
13
Immediate Action Plan - (2)
• Airspace
–
–
–
–
–
–
Replace JAATS (Jakarta’s ATC-system)
Introduce Flexible Use of Airspace
Introduce Air Traffic Flow Management
Recruit and train sufficient number of staff
Establish sufficient regulations (e.g for the use of ADS-B)
Improve Quality Assurance of Aeronautical data
14
Medium / Long-Term Plan – Aviation Law
• The 2009 Aviation Law requires some review and
revision to create a more flexible regulatory system.
• Much does not require changing: but economic
regulation section must be readdressed.
• More detailed regulation should be removed to
secondary legislation and policy.
• There is ample time to do this before 2015 if the
exercise starts soon.
• National competition law is broadly adequate but
guidelines for its applicability to aviation need to be
developed.
15
Medium / Long-Term Plan - Airlines
• Airline consolidation through relaxation of
ownership & control regulations
• Airline Alliance and code share development with
local, ASEAN and Global carriers
• Fleet procurement to increase the average size of
aircraft operating at congested airports and acquire
suitable aircraft for hub-bypass development
(regional aircraft?)
• Increase efficiency of operation and maximise
product differentiation vs.. competition
16
Medium / Long-Term Plan - Airspace
• Implement PBN (Performance Based Navigation ( according
to ICAO APAC region short term)
• Implement User Preferred Routing
• Consider WAM-(Wide Area Multilateration) for TMA and
Enroute
• Phase out of HF (High Frequency) (replaced by
CPDLC and improved VHF)
• Implement PBN (Performance Based Navigation (
according to ICAO APAC region medium term)
• Phase out of conventional radar (replaced by ADSB and WAM)
17
Incorporation of ASEAN Open
Skies Policy into
Indonesian Law
18
Objectives
The study considers:
1. Whether the 2009 Aviation Law and the 1999
Competition Law are appropriate to accommodate the
ASEAN Open Skies Policy that will take effect fully by
2015;
2. Whether national aviation law and competition law
are consistent with the provisions of the ASEAN
multilateral agreements that will implement ASEAN
Open Skies;
3. Whether current law may place the Indonesian air
transportation industry at a disadvantage compared
with its international competitors under the planned
ASEAN Open Skies regime.
19
Key Findings
•ASEAN Open Skies Policy does not create a fully liberalised market
for air services between ASEAN states.
•Comparisons with other regional open skies regimes of limited
assistance as they are not the same.
•Current Aviation Law reflects the Government of Indonesia’s
inclination to intervene in the market to seek to secure certain
broader national transportation objectives.
• Whilst some very limited government intervention can be
legitimate, it otherwise prevents a liberalised market working.
•The Aviation Law, as primary legislation, should establish only
principles, leaving the detail to secondary legislation and policy which
can respond to developments over time.
•Experience in more liberal markets than ASEAN Open Skies, e.g.
European single aviation market (where regulation, other than
Competition Law, affords carriers little protection), has been very
positive for consumers and generally positive for all stakeholders.
•Note: the review has been conducted without sight of any applicable
Ministerial Regulations or Government Regulations.
20
Proposals Aviation Law
• The 2009 Aviation Law should be amended in relation to
economic licensing of air carriers:
– to establish general principles that will endure rather than impose a
blue print on the industry which will not be appropriate in the future
– regulation needs to develop flexibly and primary legislation is too
inflexible an instrument (takes too long to change and allows
Minister and regulator too little discretion); detailed regulation needs
to be left to secondary legislation and policies and procedures
published by the Minister and the aviation regulator
– Secondary legislation and regulatory policies and procedures can be
more readily adjusted in line with developing market and industry
conditions (but still line with principles of primary legislation)
– to rebalance the present emphasis away from size and high capital
investment (which will stifle Indonesian carriers’ ability to compete
internationally) towards prudent financial fitness regulation.
21
Proposals Competition Law
• Competition law in Indonesia established in 1999
– Designed to address anti-competitive and monopolistic
practices of concern to the aviation industry;
– Some general shortcomings in substance and procedure
which require reform;
– Commission for Supervision of Business Competition
(KPPU): becoming more experienced; aware of a potential
need to intervene and that aviation has special economic
characteristics;
– Opportunity should be taken to develop guidelines in
respect of aviation in readiness for aviation related cases.
• Reform of the 1999 law may well follow - it should follow the
adoption in 2010 of the comprehensive ASEAN Regional
Guidelines on Competition Policy.
22
Demand Forecasts
23
Uses for the Demand Forecast
• Informs the Airports study: understanding future
airport infrastructure requirements.
• Informs the Airspace study: understanding future
airspace infrastructure requirements.
• Informs the airlines paper: understanding the size of
the market and the impact on airlines.
• Informs the socio economic study: understanding
and quantifying the benefits of Open Skies.
24
Indonesia in ASEAN
Country
Population
(millions)
GDP Real Growth
(2010)
Indonesia
245.6
$540.3bn
Singapore
4.7
$182.2bn
Thailand
67.8
$263.8bn
Malaysia
27.5
$193.1bn
Cambodia
14.8
$10.5bn
Brunei
0.4
$11.5bn
Laos
6.3
$5.9bn
Vietnam
87.3
$97.2bn
Myanmar
50.0
Not reported
Philippines
92.0
$161.2bn
Source: World Bank most recent statistics
25
The Airports
26
Top 10 Countries by GDP Growth
Rank
Country
Average Annual GDP
Growth
1
Nigeria
8.5%
2
India
8.0%
3
Iraq
7.7%
4
Bangladesh
7.5%
5
Vietnam
7.5%
6
Philippines
7.3%
7
Mongolia
6.9%
8
Indonesia
6.8%
9
Sri Lanka
6.6%
10
Egypt
6.4%
Source: Citigroup
27
Major Asian Airports: Passenger Traffic Trends
Millions
2005
2006
2007
2008
2009
2010
AAGR
20052010
2010
vs.
2009
JAKARTA
28.3
29.0
30.9
32.5
37.3
44.0
9.2%
17.8%
SINGAPORE
32.4
33.4
35.2
37.7
37.2
42.0
5.3%
13%
KUALA
LUMPUR
23.3
23.7
26.1
27.6
29.7
34.1
7.9%
14.8%
BANGKOK
39.0
41.0
44.3
43.6
40.5
42.8
1.9%
5.6%
DELHI
15.1
19.1
23.1
23.2
25.2
28.5
13.6%
13%
BEIJING
41.0
48.7
53.6
55.9
65.4
73.9
12.5%
13%
HONG KONG
40.3
43.3
46.3
47.9
45.6
50.4
4.6%
10.6%
28
Indonesia – Shift in Propensity to Fly
Indonesia in 2015
Indonesia in 2010
29
Base Forecast – Total Passengers
Base Case Forecast - Total Passengers
160,000,000
120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
Jakarta
Yogykarta
Bali
Batam
Surabaya
Banjarmasin
Medan
Tarakan
Makassar
Jayapura
Balikpapan
20
25
20
24
20
23
20
22
20
21
20
20
20
19
20
18
20
17
20
16
20
15
20
14
20
13
20
12
20
11
20
10
20
09
20
08
20
07
20
06
20
05
passengers per annum
140,000,000
Manado
30
Base Case Forecast – Aircraft Movements
1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
aircraft movements per annum
Base Case Forecasts - Total Movements
Jakarta
Manado
Bali
Yogykarta
Surabaya
Batam
Medan
Banjarmasin
Makassar
Tarakan
Balikpapan
Jayapura
31
Base Case – Benefit of Open Skies (Passengers)
9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
passengers per annum
Base Case Total Passengers Created by Impact of Open Skies
Jakarta
Manado
Bali
Yogykarta
Surabaya
Batam
Medan
Banjarmasin
Makassar
Tarakan
Balikpapan
Jayapura
32
Passenger Forecast for Indonesia
Total Indonesian Market Forecast - Passengers
400,000,000
350,000,000
passengers per annum
300,000,000
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Domestic
International
33
Aircraft Movements Forecast for Indonesia
Total Indonesian Market Forecast - Aircraft Movements
3,000,000
movements per annum
2,500,000
2,000,000
1,500,000
1,000,000
500,000
2005
2006
2007
2008
2009
2010 2011
2012
2013
2014
2015
Domestic
2016
2017
2018
2019
2020 2021
2022
2023
2024
2025
International
34
Open Skies Impact - Passengers
Open Skies Impact on Total Indonesian Market
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
passengers per annum
18,000,000
Total Market
35
Open Skies Impact - Movements
Open Skies Additional Passenger Aircraft Movements
Aircraft movements per annum
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Total ATMs
36
Air Cargo Demand Forecast
• Twelve study airports combined:
– International air freight: growth of over four and a half times from
286,000 tonnes in 2009 to around 1.38m tonnes in 2025
– Domestic air freight: growth of almost four and a half times from
480,000 tonnes in 2009 to 2.07m tonnes in 2025.
– This growth predicated on strong GDP growth and increased foreign
direct investment into Indonesia.
– International and domestic air mail traffic: growth at much slower
rate - less air mail transported with increasing use of electronic
means of communication.
• Additional international air freight traffic attributed to
implementation of Open Skies around 291,000 tonnes per year by
2025.
37
Impact on Airlines
38
Objectives
•
Determine potential impacts - positive and negative on major Indonesian airlines:
•
•
•
•
•
•
•
•
Garuda Indonesia
Lion Air, (including Wings Air)
Indonesia Air Asia
Batavia Air
Sriwijayah Airlines
Merpati Nusantara Airlines
SWOT analysis produced for each carrier.
Identify airlines most likely to maximise the opportunity from
implementation of the ASEAN Open Skies Policy.
39
Introduction to Indonesian Airline Industry
•
•
•
•
•
•
•
•
Comprises scheduled passenger, scheduled cargo and nonscheduled airlines: providing capacity to meet strong demand
for domestic & international passenger and air cargo services.
Airlines already operate in a very liberal domestic and
international market environment.
16 scheduled passenger airlines: 7 likely to be impacted by the
ASEAN Open Skies Agreement: subject to detailed study.
The 7 scheduled airlines include 3 airlines already heavily
involved in provision of international and domestic air services,
namely Garuda Indonesia; Lion Air and Indonesia Air Asia.
Garuda Indonesia + Indonesia AirAsia = 78% of international
scheduled passengers carried by all Indonesian airlines in 2010.
The other 4 airlines, Sriwijaya Air, Batavia, Wings Air and
Merpati strongly focused on the domestic passenger market international passengers < 5% of each airline’s total passengers
in 2010.
3 scheduled cargo airlines: small aircraft fleets and available
capacity. Air freight services already liberalised within ASEAN
(agreement has not been ratified by the Indonesian
government).
The non-scheduled airlines mainly perform niche operations:
not impacted by the ASEAN Open Skies Agreement.
40
Characteristics of Successful Airlines in
Liberalised Environments (1)
• Management style.
• Appetite for international expansion appears limited in a
number of airlines, corporate culture and adopted business
model impact on airline growth potential
• Young and appropriate fleets.
• Some airlines are acquiring modern regional aircraft for new
route opportunities, some are standardising/simplifying
their fleet structures, some are focusing on single aircraft
type, some still have complex fleet structures
• High aircraft utilisation.
• To achieve lower total seat costs and crew efficiencies
• Efficient turn-rounds.
• Maximising the use of the capital equipment, a number of
carriers remain concerned of Indonesian airports reducing
aircraft turn-round times
41
Characteristics of Successful Airlines in
Liberalised Environments (2)
• High load factors.
• Load factors of some Indonesian carriers on international
services are much lower than on domestic services, new
entrant carriers with low cost model achieving higher load
factors
• Cost control.
• New entrant carriers better placed to achieve lower cost
base, use of regional subsidiaries being used by some
carriers to improve cost base
• Distribution and yield management controls.
• Indonesian market hasn’t fully embraced the low cost
model of direct sell distribution: use of credit cards, mobile
phone payment. Some carriers are still without internet
selling capability
42
Traffic Performance of Major Airlines (2010)
25.0
Passengers (millions)
20.0
15.0
10.0
5.0
0.0
Lion Air
Garuda
Sriwijaya Air
Domestic
Batavia Air
Indonesia AirAsia
Merpati
Wings Air
International
Source: DGCA
43
Airline Fleets
• Unique geographical situation, growing population and
continued economic prosperity will increase propensity to fly.
• Proof - rapid growth in domestic air travel.
• Passenger growth on international routes is from a much lower
base.
• The load factors achieved by Indonesian airlines on
international services generally lower than for domestic
services.
• Some Indonesian airlines are rapidly increasing their fleet sizes.
• With the exception of Indonesia AirAsia, most new seat
capacity is currently being deployed into domestic markets.
• In the period from March to November 2010 the aggregate
fleet size of the seven largest Indonesian airlines increased by
20%.
• Some carriers are either ordering or signing letters of intent to
acquire smaller regional aircraft which could be deployed on
new ‘thinner’ intra-ASEAN markets.
44
Indonesian Carriers & ASEAN
Batavia
5%
Sriwijaya Air
3%
Merpati Air
2%
Lion Air/Wings
18%
Indonesia Air Asia
53%
Garuda
19%
•
•
•
Services to ASEAN countries account for 4.6% of total seat
capacity offered by Indonesian airlines (March 2011)
Indonesia AirAsia has largest commitment to ASEAN market:
53.5% of total ASEAN seat capacity offered by Indonesian carriers
and 54.7% of total capacity offered by airline.
Seat capacity to international destinations outside ASEAN
represents 2.9% of total seat capacity offered by Indonesian
carriers.
45
The ASEAN Challenge (1)
• Most bilateral Air Service Agreements between Indonesia and
ASEAN member states have capacity and frequency limitations
applied through Confidential Memorandum of Understandings
(CMOU).
• All but one of the airlines interviewed regarded limits as
necessary to protect Indonesian carriers from capacity and
frequency increases by the larger (and more successful)
ASEAN hub-carriers, particularly Singapore Airlines.
• Indonesia to Singapore and, to a lesser extent, Indonesia to
Kuala Lumpur city pairs are the most capacity constrained;
airlines of both sides operating close to the maximum
permitted by the CMOU.
• The Jakarta to Singapore route is the city pair most likely to
see immediate capacity growth once the Open Skies
agreement is implemented.
46
The ASEAN Challenge (2)
• Singapore Airlines and Thai Airways operate aircraft of much
larger average size than Indonesian carriers - their operations
are primarily long- and medium-haul.
• Indonesian airlines already find it difficult to compete against
carriers such as Singapore Airlines – viewed as the airline most
likely to benefit from Open Skies - by enabling it to feed more
international passengers over its hub.
• Existing connecting passenger traffic currently using domestic
services offered by Indonesian airlines will be impacted as more
international capacity is added, passengers will transfer from
indirect routings over Jakarta to direct routings to other
Indonesian cities
47
Constraints
• The nature of the Indonesian marketplace and airport
infrastructure are constraints to obtaining maximum benefits
from Open Skies.
• Combination of currency restrictions, limited use of credit
cards by the consumer and extended credit facilities offered
by the travel trade will impact on the speed of development of
web (on-line) sales.
• Airport capacity, particularly at Soekarno-Hatta, Jakarta, is very
constrained.
• The restricted opening hours of most other Indonesian
international airports impacts negatively on airline schedule
development and operating efficiency.
48
Conclusions
• Most Indonesian carriers consider that the opportunity for
profitable growth will come from domestic expansion
• Seek to delay international route access and capacity
expansion until their domestic growth has matured.
• Most Indonesian airlines would like to see a gradual
introduction of an Open Sky agreement across Indonesia to
ASEAN markets, with a gradual removal of capacity and
frequency constraints currently applying on a bilateral basis,
so they can concentrate on domestic growth in the short to
medium term.
49
Impact on Airports
50
Objectives
• Determine the future terminal and airfield
requirements based on the 2025 traffic forecasts
for 7 airports.
• Assess the safety and security procedures at the
airports and their compliance with current ICAO
requirements.
51
Study Airports
• The following airports were studied:
–
–
–
–
–
–
–
Jakarta Soekarno Hatta
Denpasar Bali Ngurah Rai
Surabaya Juanda
Medan Polonia/Kuala Namu
Manado Sam Ratulangi
Balikpapan Sepinggan
Makassar Sultan Hasanuddin
52
Data Gathering (1)
• A site visit was made to 6 of the 7 study airports.
• Medan was not visited – the current airport is
closing and will be replaced by a new facility
scheduled to open in 2012/13
• Data provided by IndII, AP1, AP2 and DGCA
• Internet based research was used to augment the
available data
• Where information was unavailable international
standards were used as appropriate
53
Data Gathering (2) & Development Plans
• Jakarta – Development planned but no details given.
• Surabaya – Increased provision of check-in but no timescale
provided.
• Bali – Development plans were made available but no
timescale provided.
• Makassar – Airport operator stated that plan was to double
terminal capacity by 2015.
• Medan – Press releases suggest the airport will be opened
at the end of 2012 but to date plagued by construction
issues.
• Balikpapan – Development plans made available. No
timescale given.
• Manado – Development planned for 2013 but no details
given.
54
Data Gathering (3) & Missing Data
• Not all data was readily available, including:
– The split of arriving passengers by Indonesian
national/foreign national.
– Security throughput data was unavailable. No
standardised method of measuring flow rates
55
Assessing Terminal Facility Requirements
• Data was combined with the Mott MacDonald
forecasts to evaluate terminal facility requirements
using an algorithmic spreadsheet.
• For check-in a range of facility requirements was
established that represented 30-50% of passengers
not using conventional check-in desks for check-in
procedures in 2025.
• It was assumed that the remainder of passengers
would use Online Check-in/Kiosks and Bag Drops.
56
Terminal Facility Shortfall by Airport in 2025
Jakarta
Surabaya
Bali
Makassar
Medan
Balikpapan
Manado
HBS Screening Lanes
7-18
7-10
7-9 *
4-7 *
- **
0-1 *
0*
Check-in Desks
34-68
0*
0*
0*
- **
0*
0*
58
4
7*
3*
- **
0*
0*
Security Search Lanes
– Domestic
5-10
2-4
0*
- **
0*
0*
Security Search Lanes
– International
5-8
0
0*
- **
0*
0*
Gate Rooms –
Domestic
10 Code C
15 Code
C
1 Code E
4 Code C *
11 Code C
*
- **
6 Code C *
0*
Gate Rooms –
International
8 Code C
2 Code E
6 Code C *
0*
- **
0*
0*
35-83
1-9
23-43 *
5-9 *
- **
3-4 *
0*
Reclaim Belts –
Domestic
8 Code C
6 Code E
9 Code C
2 Code C *
2 Code E *
4 Code C *
- **
0*
0*
Reclaim Belts International
8 Code E
1 Code C
2 Code C *
0
- **
0*
0*
Outbound Passport
Control
Inbound Immigration
Desks
5-6 *
* Planned development included in analysis
** Details of current facilities not available, hence unable to calculate 2025 shortfall
57
Terminal Facility Requirements: Key points
• The majority of development is required at Jakarta
• Zero development required at Manado
• Larger space requirement will be in relation to Gate
Rooms and Reclaim Belt provision
58
Assessment of Airfield Facility Requirements
• Main focus on runway and taxiway capacity and
stand requirements.
• There are more than just the physical attributes to
consider including airspace and ATC procedures.
59
Airfield Facility Shortfall by Airport in 2025
Jakarta
Surabaya
Bali
Makassar
Medan
Balikpapa
n
Manado
61-63 *
9-11 *
4-6 *
10-12
0*
0*
0*
Runway Code
Adequate *
Adequate
*
Adequate
*
Adequate
*
Adequate
*
Adequate
*
Adequate
*
Taxiway Capacity
Adequate *
Adequate
*
Adequate
*
Adequate
*
Adequate
*
Adequate
*
Adequate
*
Taxiway Code
Adequate *
Adequate
*
Adequate
*
Adequate
*
Adequate
*
Adequate
*
Adequate
*
Aircraft Stands –
Code E
0*
0*
0*
0*
0*
0*
0*
Aircraft Stands –
Code C
147 *
56 *
34 *
34 *
11 *
18 *
0*
Runway Capacity –
Movements per
Hour
* Planned development included in analysis
** Details of facilities not available, hence unable to calculate 2025 shortfall
60
Airfield Facility Requirements: Key points
• The majority of development is required at Jakarta.
• Zero development required at Manado.
• Generally, the most significant development will be
provision of new stands.
• For Jakarta it will be provision of 1 or 2 new runways
and associated infrastructure.
61
Safety and Security Issues
• Observed levels of security are not compliant with
international best practice. Particular concern with
hold bag screening process and passenger screening
process
• Only one of the airports visited could produce an
airside operations manual
• Lack of action to mitigate bird hazards
• Inadequate provision of facilities to ensure segregation
of arriving and departing passengers
62
Costs Directly Attributable to ASEAN Open Skies (£’000s)
Terminal Facilities
Jakarta
Surabaya
Bali
Makassar
Medan
Balikpapan
Manado
Check-in Desks
2,035
0
0
0
-*
0
0
Outbound Passport
Control
22.5
6.25
10
3.75
-*
0
0
Security Lanes International
1,400
0
0
700
-*
0
0
Gate Rooms –
International
4,585
1,310
1,310
0
-*
0
0
Inbound Immigration
Desks
1,620
708.75
1,316.25
708.75
-*
303.75
0
Reclaim Belts International
4,500
750
750
0
-*
0
0
£14.2M
£2.8M
£3.4M
£1.4M
-*
£0.3M
£0.0M
TOTAL COSTS (£M)
Airfield Facilities
Jakarta
Surabaya
Bali
Makassar
Medan
Balikpapan
Manado
Taxilane
4,488
1,870
1,870
748
374
1,122
0
Aircraft Stands
7,128
2,970
2,970
1,188
594
1,782
0
£11.6M
£4.8M
£4.8M
£1.9M
£1.0M
£2.9M
£0.0M
TOTAL COSTS (£M)
* Details of facilities not available, hence unable to calculate 2025 shortfall or costs attributable to ASEAN
Open Skies. Costs derived using UK costs without contingency
63
Conclusions
• The most pressing need for new capacity is at Jakarta,
Surabaya and Bali
• It is easier to “sweat” terminal facilities than airfield
facilities
• Surface access is likely to be a major issue at all
airports due to a lack of adequate rail and road access
• Land use Master Plans should be developed in light of
the shortfalls in requirements highlighted by this
report
• The DGCA should formulate and recommend a defined
policy based on international best practice for safety
and security
64
Impact on Airspace
65
Indonesian Airspace
66
Current Situation – Airspace Management and
Organisation
• Conventional ATS-routes –
–
•
following ground installations
About 15 RNAV (Area Navigation) routes
used for international traffic
– Routes consist of waypoints based on either
satellite positions or DME installations
•
Conventional SID/STAR-design –
–
•
In- and outbound traffic to airports
No Flexible use of Airspace (FUA) –
–
Collaborated decision making regarding the use
of airspace between military and civilian users
• Congested areas (Java)
67
Future Demand
RED = International traffic
BLUE = Domestic traffic
1.
2.
3.
4.
5.
Overflying traffic will double
International traffic +31,7%
Open skies will add 5,5%
Jakarta will exceed capacity in
peak hrs already 2015
City pair Jakarta – Surabaya
will almost double
Source : JICA 2008 forecast 2025.
68
Key Findings and Proposed Solutions (1)
•
Open sky implementation
• No need for route structure changes
•
Overall traffic increase
• Capacity enhancements
• Update infrastructure
• New ATM system in Jakarta ACC
• Update of Ujung Pandang ACC
• New sectorisation
• Additional Air Traffic Controllers needed
• Monitor and evaluate the ATM performance
69
Key Findings and Proposed Solutions (2)
• Air Traffic Flow Management – ATFM
• Flexible Use of Airspace – FUA
– CDR concept
• Traffic Synchronisation – TS
– Collaboration between stakeholders:
• ANSPs
• Airport Operators
• Regulators
• Military
70
Key Risks
• Organisational changes of ATM – Law No.1/2009
– Many projects are running in parallel
• Shortage of staff
– Operational Air Traffic Controllers
– Technical experts
– Operational experts
71
Economic and Social Appraisal
72
Objectives
• To provide a structured socio-economic assessment using
recognised transport appraisal techniques comprising:
– GDP and employment impacts nationally and at the provincial
level.
– Cost Benefit Analysis – impacts on users (journey time savings,
air fare savings), producer benefits (airlines and airports),
government set against any capital or other costs of
implementation.
– Connectivity Impacts – improved connections for business.
– Qualitative Impacts – tourism, effects on investment, improved
provincial links, effects on quality of life, e.g. lifeline routes.
73
Data
• To undertake the assessment used:
– The demand forecasts.
– Expected impacts on Airlines.
– Information on Airport and ATM costs.
– Published data on the Indonesian economy, including tourism.
– Discussions with key stakeholders in March 2010.
74
Limitations
• Accuracy of assessment is ultimately reliant on the quality
and availability of underlying data.
• Significant issues in relation to the collection of data,
particularly in relation to:
– No detailed data has been available on numbers of employees
on site at the 12 airports;
– Information on passenger purpose of travel and values of time;
– Detailed airline and airport financial data;
– Provincial level multiplier information and more specialist
information on the international economy.
• In all cases we have used reasoned assumptions to fill gaps.
• Whilst broad messages are correct, impacts must be seen as
orders of magnitude and directions of effect rather than
precise estimates.
75
Definitions of Impact
• Uses a generally accepted framework for economic impact
assessment.
• Quantifiable GDP and employment impacts categorised as:
– Direct: generated by activity at airports or in immediate vicinity and
directly related to provision of air services;
– Indirect: supported by the supply chain to direct activities;
– Induced: supported by expenditure of earnings from direct and
indirect.
• Fourth category known as catalytic or wider impacts:
– Focuses on the impact on issues such as trade, investment, technology
transfer, productivity and tourism. Relates to the impact on users
rather than the industry itself;
– Generally held to be unquantifiable in terms of GDP and employment.
Considered through socio-economic cost benefit analysis and
qualitative analysis.
76
Current Impacts
Province
Total inc Indirect & Induced
Direct
Jakarta
Bali
Surabaya
Medan
Makassar
Balikpapan
Manado
Yogykarta
Batam
Banjarmasin
Tarakan
Jayapura
Total
National
Total inc Indirect & Induced
Employment
GDP
Employment
GDP
Employment
GDP
77,000
11,000
8,000
5,000
6,000
3,000
2,000
2,000
3,000
2,000
1,000
2,000
122,000
13,710
310
290
220
180
370
50
50
220
40
110
120
15,700
165,000
18,000
13,000
9,000
10,000
5,000
3,000
3,000
4,000
2,000
2,000
3,000
237,000
29,500
500
500
400
300
600
100
100
300
100
200
200
32,600
165,000
18,000
14,000
9,000
10,000
7,000
3,000
4,000
5,000
3,000
2,000
4,000
243,000
29,500
700
600
500
400
800
100
100
500
100
200
300
33,700
Source: York Aviation.
•
Baseline impact in 2010 of 243,000 jobs and IDR 33.7 trillion.
•
Jakarta by far the largest generator of jobs and GDP.
•
Much of the indirect (supply chain) impact is assumed to arise in the
vicinity of Jakarta.
77
Total Impacts – Open Skies Effect
•
By 2025, the total impacts have increased to around 505,000 jobs
and 117.7 trillion Rupiah of GDP.
•
An additional 29,000 jobs and 6.3 trillion Rupiah of GDP compared
to without Open Skies.
78
Employment Impacts – Open Skies Effect by
Province
Province
Direct
Own Indirect &
Induced
Other Indirect &
Induced
Total
Jakarta
Bali
East Java
North Sumatra
South Sulawesi
East Kalimantan
North Sulawesi
Yogyakarta
Riau
South Kalimantan
Papua
10,600
2,100
1,100
700
500
300
100
100
100
0
200
10,100
1,200
600
400
100
200
0
100
0
0
100
500
0
0
0
0
0
0
0
0
0
0
21,200
3,300
1,700
1,000
600
500
100
200
100
100
300
• Primary impact is in and around Jakarta. However, there are
significant gains elsewhere, particularly in Bali and East Java.
79
Cost Benefit Analysis (1)
•
The second element of our quantified assessment of the impact of
ASEAN Open Skies on Indonesia focuses on an assessment of the
impact of the changes on socio-economic welfare.
•
Designed to give a broader view of the costs and benefits to society
as whole from the liberalisation of air services rather than focusing
specifically the impacts on the level of economic activity.
•
Focuses on quantifying and then monetising the impact of ASEAN
Open Skies on a range of different groups in the economy and
society. These groups are:
– Passengers (Users): journey times and air fares;
– Airports (Producers): operating surplus and investment costs;
– Airlines (Producers): operating surplus and investment costs;
– The Government of Indonesia: tax revenue.
80
Cost Benefit Analysis (2)
• Variety of assumptions made to make the assessment.
• Key issue was impact on Indonesian airlines. Concerns exist as
to whether Indonesian airlines will be ready to take
advantage of the opportunities offered by Open Skies in 2015.
• Assumed that Indonesian airlines will only capture 25% of
Open Skies growth.
• This leads to a significant loss in ASEAN market share from
around 39% in 2010 to around 33% in 2025. This does not
result in an absolute loss of passenger demand across
Indonesian airlines as a whole, although there may be
individual winners and losers in terms of benefiting from
growth.
81
Cost Benefit Analysis - Results
Benefits – Indonesian Users
Journey Time Savings
Airline Benefits
Air Fare Savings
Government Revenue
•
Benefits to Indonesian
users are significant.
Primary source is air
fare savings.
•
Total benefits of
around IDR 7.3 trillion
in 2025 for Indonesian
users.
•
Discounted benefits
for the period of
around IDR 26.9
trillion.
•
Costs to Indonesian
users primarily relate
to airline investment
costs.
•
Discounted costs to
2025 of around IDR 5.0
trillion to Indonesian
Users.
Airport Benefits
8,000
7,000
Billion Rupiah
6,000
5,000
4,000
3,000
2,000
1,000
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Costs – Indonesian Users
Airport Infrastucture Costs
ATM Costs
Airline Equipment Costs
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
0
Billion Rupiah
-200
-400
-600
-800
-1,000
-1,200
82
Cost Benefit Analysis - Results
3,500
3,000
Billion Rupiah
2,500
2,000
1,500
1,000
500
0
-500
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
•
Net flow of costs and benefits to Indonesian users is positive. NPV of
IDR 21.9 trillion and BCR of 5.4.
•
Results for All Users are also important. Benefits and costs to nonIndonesian users are not a direct benefit to Indonesia but they do
reflect Indonesia’s attractiveness as a place to invest, do business and
visit
83
Cost Benefit Analysis - Results
Summary of Discounted Costs and Benefits (IDR Billions)
Indonesian Users
All Users
Benefits
Journey Time Savings
Air Fare Savings
Airport Surplus
Airline Surplus
Government Revenue
Total Benefits
Costs
Airport Infrastructure
ATM Costs
Airline Equipment Costs
Total Costs
NPV
BCR
1,133
18,426
1,286
1,177
4,903
26,925
2,220
31,671
1,286
10,473
4,903
50,553
-219
-10
-4,747
-4,976
21,949
5.4
-219
-10
-18,557
-18,786
31,767
2.7
84
Cost Benefit Analysis - Results
Location of Discounted Benefits by Airport (IDR Billions)
Jakarta
Bali
Surabaya
Medan
Makassar
Balikpapan
Manado
Yogykarta
Batam
Banjarmasin
Tarakan
Jayapura
Total Present Value
Passenger
Benefits
10,505
2,994
2,430
2,158
412
165
114
395
81
92
112
101
19,559
Producer
Benefits
2,463
0
0
0
0
0
0
0
0
0
0
0
2,463
Government
Revenue
4,903
0
0
0
0
0
0
0
0
0
0
0
4,903
Total
17,871
2,994
2,430
2,158
412
165
114
395
81
92
112
101
26,925
•
Benefits to passengers are assumed to accrue to individual airports.
Airline and airport benefits tend to Head Offices in Jakarta and
Government revenue to Jakarta as the seat of Government.
•
The primary beneficiary of Open Skies is Jakarta but again there are
significant benefits elsewhere.
85
Wider Impacts
• Currently, the economy is focused more towards primary
(extraction of raw materials) and secondary (manufacturing)
economic activities, rather than higher added value tertiary
(service) activities.
• Partly a reflection of the Country’s strength in terms of its
natural resources. The country has significant oil and gas
reserves, which make a significant contribution towards
Indonesia’s GDP, and a range of other resources such as Palm
Oil, Thermal Coal, Cocoa and Tin.
• Focus is very much on servicing the countries very large
domestic markets.
86
Wider Impacts
•
Achieving a step change in economic performance is likely to require
an increasing emphasis on high value added activities and those in the
‘knowledge economy’. These are likely to include sectors with a
significantly greater need for air transport access, such as:
–
–
–
–
–
–
–
–
–
–
Banking and financial services;
Management and professional services;
Property;
Aerospace;
IT;
Research and Development;
Transport;
Telecommunications;
Oil and Gas;
Mining and Quarrying.
87
Wider Impacts – the Role of ASEAN Partners
Exports
Australia
& Oceania
3%
Europe
13%
Imports
ASEAN
21%
Australia
& Oceania
4%
America
9%
America
10%
Africa
2%
ASEAN
29%
Africa
2%
Other Asia
51%
Other Asia
44%
•
ASEAN is clearly and important
international partner, particularly for FDI.
•
Singapore is a particularly important
partner.
•
However, in terms of trade particularly,
other parts of the world are important
(notably Other Asia).
•
ASEAN Open Skies is therefore helpful but
should be only a first step.
Sources of FDI by Value
Europe
24%
Australia &
Oceania
2%
ASEAN
44%
America
9%
Africa
6%
Europe
12%
Other Asia
15%
88
Wider Impacts – Tourism (1)
MARKET PERFORMANCE 2010
NO
Source :
National
Statistic
Bureau, Jan
2011
TARGET MARKET
2010
2009
% Growth
1
SINGAPORE
1,128,906
1,050,202
7.49%
2
MALAYSIA
1,034,642
897,881
15.23%
3
AUSTRALIA
730,941
538,849
35.65%
4
CHINA
421,518
372,748
13.08%
5
JAPAN
406,011
469,796
-13.58%
6
KOREA
281,785
238,937
17.93%
7
TAIWAN
191,133
185,992
2.76%
8
U.K
186,960
178,337
4.84%
9
USA
171,528
162,302
5.68%
10
FRANCE
158,280
163,364
-3.11%
11
NETHERLANDS
153,284
148,828
2.99%
12
INDIA
145,179
132,620
9.47%
13
GERMANY
138,707
126,272
9.85%
14
RUSSIA
79,100
68,930
14.75%
15
SAUDI ARABIA
68,878
51,660
33.33%
16
UAE
4,906
3,760
30.48%
1,701,186
1,661,781
2.37%
7,002,944
6,452,259
8.53%
OTHERS
TOTAL
13
•
Biggest markets are within ASEAN, Singapore and Malaysia, but
others generate limited demand.
•
Limited numbers from Europe and North America may reflect lack of
direct connections.
89
Wider Impacts – Tourism (2)
•
Target markets within the tourism development strategy will
reinforce this pattern – only Philippines from other ASEAN (i.e. not
Singapore and Malaysia) is a target.
•
The Ministry of Culture and Tourism has identified that air seat
capacity is relevant to the promotion of tourism and the attraction of
additional visitor numbers. However, this is at an aggregate national
level and not linked to priority areas for tourism development
•
Bali is the biggest attraction now and will continue to be a focus for
the future. The strategy identifies an objective to see a diversification
of tourism destinations, with an emphasis on reducing the disparities
in tourism between Western and Eastern Indonesia
•
Developing air service access is identified as a priority. International
experience would suggest direct access will assist in this, particularly
in terms of dispersing the tourism product
•
Therefore, it would seem reasonable that while ASEAN Open Skies
can only be helpful in developing tourism but ultimately the main
markets for the future are further afield
90
Wider Impacts: Economic Transformation Plan
•
Indonesia has recently drawn up an Economic Transformation Plan.
The aim is to improve economic performance and to see Indonesia
move up the ranking of world economies by size from 17th in 2010 to
12th in 2025 and 7th or 8th in the longer term.
•
There are three fundamental planks to this economic transformation
strategy:
– reassessing historical engines of growth;
– strategically resolving the lack of infrastructure;
– realigning policy to focus on economic strengths.
•
At the core of this strategy is the prioritisation of development to six
strategic corridors, with a focus in eighteen key sectors or economic
areas integrated into these strategic corridors.
•
Ultimately, this strategy would see Indonesia become a globally
competitive knowledge based economy at the forefront of innovation
and with a skilled labour force.
91
Wider Impacts: Economic Transformation Plan
•
ASEAN Open Skies will tend to cement the link with Singapore and its
importance as an investment partner. It is also likely to cement the
importance of ASEAN partners overall as sources of inward
investment, building on their existing 44% share.
•
To that extent, Open Skies can be seen as an important step towards
attaining cohesiveness in the region. However, on its own, ASEAN
Open Skies may not be sufficient to overcome obstacles to attracting
more inward investment globally.
•
In terms of trade, Other Asian countries are more important trading
partners than the countries within ASEAN. This further suggests that
ASEAN Open Skies needs to be seen as a first step to opening up
improved air service access throughout Asia.
•
So, whilst ASEAN Open Skies will contribute to the modernisation of
the Indonesian economy, the limitation to the ASEAN region alone
may constrain the impact it will have, as will the restriction on the
proposed opening up to only five main airports from 2015.
92
Wider Impacts – Connectivity
•
The core driver of many of the wider, unquantifiable impacts of
air services is the extent to which changes in air services enable
improvements in connectivity.
•
International BCI Score
2010
2025 with Open Skies
100
50
Jayapura
Tarakan
Banjarmasin
Batam
Manado
Balikpapan
Percentage Change as a Result of Open Skies
Banjarmasin
Batam
Makassar
Yogyakarta
Medan
Surabaya
160%
140%
120%
100%
80%
60%
40%
20%
0%
Bali
Open Skies is a
chance to connect
directly to global
centres in ASEAN
much more
effectively or for the
first time.
Makassar
Medan
Surabaya
However, the
smaller airports
experience much
greater gains.
Jakarta
•
Yogyakarta
•
Bali
Jakarta
0
Balikpapan
150
2025 no Open Skies
Manado
200
Jakarta and the
other large
airports are the
primary providers
of both business
focused
connectivity now
and in the future.
93
Conclusions and Recommendations
•
Our analysis suggests that the benefits from the implementation of
ASEAN Open Skies are likely to significantly outweigh the costs, both
in terms of capital costs and in terms of any lost profits for Indonesian
airlines. Our assessment of quantified impacts suggests that the
majority of benefits will accrue to Jakarta and to a lesser extent
Indonesia’s other larger airports. This is unsurprising considering that
these airports experience the largest impacts in terms of demand
growth.
•
However, there is a need for greater understanding of the linkage
between air service development and economic growth, informed by
more in depth analysis to support the development of policy. We
believe that the benefits could be even greater than those arising
from the current Open Skies proposal, particularly in regional
economic development terms, from extending the scope of Open
Skies to include more gateways and to achieve greater synergy with
the strategy for development focussed on six Economic Corridors.
•
Furthermore, in order to support the modernisation of the
Indonesian economy and to assist with the aim of seeing Indonesia
raise its economic status globally, there is a strong case for a more
liberal approach to be taken towards the development of air services
with other world regions.
94
Overview
95
Terima Kasih!
Questions and Answers
96