Australia Could Get a Piece of a US$25 Billion Pie to Develop Indonesian Airports

In late 2015, a study from consultant cabinet PwC highlighted that Indonesia would need to invest US$25 billion to upgrade its airports capacity as the average annual air trafic’growth is expected to reach 4.8% per year.

“Conditions are made easier for foreign or domestic private investors to enter the market, since these levels of investment largely exceed the capacity of the state-owned operators, Angkasa Pura I and II, to deliver”, concluded the report. Last year, Indonesia 12 largest airports welcomed 152.17 million passengers, a growth of 10.34% over 2015. Last year excellent performance reverts two years of consecutive decline in passengers’ numbers.

The Government’s plans assume a significant proportion of the country’s infrastructure needs will be funded by the private sector. One of the first countries which could benefit of the opening of airports’ for foreign investments is certainly Australia.

In March of this year, Transportation Minister Budi Karya Sumadi met his Australian counterpart, Minister Fiona Nashhas, who is in charge of Australian Regional Development, Regional Communications, and Local Government and Territories. Both Ministers announced that the Indonesian government would offer an Australian company the opportunity to jointly manage Lombok International Airport in West Nusa Tenggara.

“We are offering an airport operator in Australia the chance to jointly operate Lombok airport,” Budi said. Currently, the Lombok International Airport is managed by state airport operator Angkasa Pura (AP) I. it is said to be unprofitable despite the fact of rising passengers traffic. Last year, Lombok new international airport reached a record of 3.45 million passengers, up by 35% over the year 2015, when the airport welcomed “only” 2.55 million travellers. The airport is now the 15th busiest in the country.

The meeting also highlighted possible cooperation between the two countries in tourism and aviation, especially in remote and border areas. Indonesia foresees the construction of new airports in remote areas in a bid to foster tourism development. The archipelago plans expanding or new facilities in  border areas such as Rote Island and emerging tourist destination such as Labuan Bajo.

Australia mentioned the Christmas Island as well as an area for possible flights from Indonesia.

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