Soaring passenger numbers hold out prospect of riches
RESTRUCTURING IS ESSENTIAL TO ENABLE THE STATE-MANAGED AUTHORITIES TO HANDLE THE MASSIVE INCREASE IN TRAVELERS

GATOT PUDJO MARTONO President Director of Angkasa Pura I

The state-owned companies which manage Indonesia’s airports have seen passenger numbers soar in recent years.
Angkasa Pura I manages 13 major airports in central and eastern Indonesia, while Angkasa Pura II manages 10 in the west of the country.
The 40-year-old enterprises are now being restructured and the government plans to privatize them this year. Other airports not managed by them will be transferred from government control to the local administrations in the new era of decentralization.
Only three of the airports managed by Angkasa Pura I are profitable, says President Director Gatot Pudjo Martono. They are Denpasar in Bali, Surabaya in Jawa Timur and Makassar in Sulawesi. “Nevertheless, these three airports represent around 80 percent of our activity,” he says. And with revenues exceeding more than 800 billion rupiah ($91 million), the company stays profitable overall.

It is easy to see why Angkasa Pura I is able to maintain profitability. Last year, 4.5 million passengers passed through Denpasar, and around 2.5 million used Surabaya. Makassar in Sulawesi is also benefiting from growing passenger numbers, mainly tourists.
Angkasa Pura I is divided into aviation and non-aviation business. The former deals with airlines and airport functions, while the latter handles airport shops and restaurants. About 60 percent of revenues come from the aviation side, the rest from non-aviation business.
Mr. Martono says the company is being restructured into a high performance organization prior to its privatization. “I think it will be privatized before the end of the year,” he adds.

AIRPORT MANAGEMENT company Angkasa Pura I oversees the operations of thirteen major airports in central and eastern Indonesia.

Angkasa Pura I is trying to increase revenues and one way is to increase the number of flights. The company is offering a 50 percent discount on landing fees at Bali for airlines which arrive between midnight and 6am. The airport is quieter then because all the flights from Europe and Singapore arrive and depart by midnight.

There is no competition between the international airport serving the capital, Jakarta, and Bali – Eastern Indonesia’s main airport, says Mr. Martono. Efforts are being made to attract more people to Indonesia overall, whether through Jakarta, Bali or other airports, he says.
Increasing numbers of travelers are now flying directly to international airports on islands where they want to be for specific reasons, such as the divers who go to Sulawesi. “We are improving all our airports. We are concentrating on cargo services at Surabaya, tourism in Bali and air traffic services in Makassar,” says Mr. Martono. “We also plan to optimize the use of Biak airport (in Papua) as an international airport.”

Making Biak the center of the United Economic Development Region (KAPET) for Eastern Indonesia will undoubtedly help business prospects at the regional airport. Sulawesi is already a major hub for air traffic between Western and Eastern Indonesia.
Meanwhile, the central government is negotiating for a new airport at Surabaya and is also developing the airport on Ambon. “Angkasa Pura I is still able to fund itself. However, to build new airports we are still dependent on the central government,” adds Mr. Martono.
The central government has also developed a new airport, including a new terminal and a lengthened runway at Manado in Slawesi Utara, although fewer than 350,000 passengers a year are presently using it.
Lombok is an increasingly popular holiday destination and there is a small international airport on the island. However, only one international airline currently flies there.

Mr. Martono says plans to build a new international airport on Lombok fell through as a result of the region’s economic crisis of 1998. “Our first priority is to attract more international airlines to come to our airports, as well to keep improving services at all the airports,” he says. “As our services have improved, the services of local governments will also improve.”
It is becoming easier to attract more visitors to Indonesia as the tourism promotion drive has enthusiastic support from local governments who are looking to broaden their appeal.
Air traffic has been growing at around seven percent a year. The increase in passenger numbers has been particularly notable in Eastern Indonesia, where many of the country’s most beautiful and unexplored regions are to be found.

In addition, more and more Indonesians are making making the haj, the pilgrimage to the holy cities of Mecca and Medina, which every Muslim is expected to undertake at least once in his life. Pilgrimage flights from four airports managed by Angkasa Pura I have gone up by about 10 percent annually.
A tourism boom is predicted in the Asia-Pacific region next year, with the advent of the Asian Free Trade Area. This is expected to benefit all of the airports run by Angkasa Pura I, while expansion of free trade areas in subsequent years will undoubtedly benefit Eastern Indonesia.
Business is also improving for Angkasa Pura II (APII), the operator of Jakarta’s Soekarno-Hatta International Airport as well as nine others in Western Indonesia.
Soekarno-Hatta handles around 13 million passengers a year, well below its 18 million capacity. It can operate 74 aircraft an hour, but currently has less than a third of this number, so there is plenty of room to increase flights to Jakarta.

EDIE HARYOTO President Director of Angkasa Pura II

APII President Director Edie Haryoto says: “The airline business has now recovered from the recession, although it’s not yet booming. But I think we can create other businesses that do not depend exclusively on airlines.”
His idea is to create an airport city around Soekarno-Hatta, which would include shopping malls, restaurants and hotels, a health center, cargo handling and warehousing, golf courses and possibly some light manufacturing. “With or without privatization, I have plans to make the airport not just an airport,” he says. “It has very good prospects.”

About 85 percent of APII’s revenues derive from aviation, the rest from retailing and other non-aviation businesses. Mr. Haryoto believes that Soekarno-Hatta should follow the examples set by other airports around the world, such as Amsterdam’s Schiphol and Singapore’s Changi, where he says a greater proportion of the revenues derive from non-aviation businesses and services.
In contrast to his counterpart in Angkasa Pura I, Mr. Haryoto
believes there is a degree of competition between Denpasar in Bali and Soekarno-Hatta. “We are competing with Angkasa Pura I. If Denpasar is better than Soekarno-Hatta because it has good services and so on, you would probably choose to fly to Europe via Bali and not via Soekarno-Hatta,” he says.

That’s why Mr. Haryoto has other plans for Jakarta’s airport. “The airport itself is a very good design, and is very Indonesian. But we are not yet satisfied with services. Passengers need better transfer services and I think more information needs to be provided,
especially for foreigners,” he says.“The first thing that we want to do is to make the passengers more comfortable. We also have an idea to create a check-in in Jakarta, controlled by us at the airport. That’s my dream, because there are often traffic congestion and flooding problems on the way to the airport.”
Another of Mr. Haryoto's proposals is the development of the airport on Batam Island. “We have a vision to compete with Singapore because Batam is so close to it. Soekarno-Hatta, in terms of geographical potential, is not really in the heart of Asia, but Batam, as well as Medan (in northern Sumatra), have potential because of their geographical location and because of the airlines’ routes,” he explains.

THE DOVERNMENT is planning to sell a 49 percent stake in Angkasa Pura II (APII), the state-owned operator of Jakarta’s Soekarno-Hatta International Airport, as well as nine others in Western Indonesia, by the end of the year.

“That’s our objective for Batam, where we would develop our cargo business. Batam is currently under the control of the local authority and we have offered to take it over. If the (provincial) governor agrees, maybe we could also privatize Batam airport.”
Just 12 miles to the south-east of Singapore – a 45-minute ferry ride – Batam is, at 160 square miles, two-thirds the size of Singapore. The island has played a strategic role for centuries for traders and adventurers, and as a naval base.

From Batam the admiral Hang Nadim fought the Portuguese in the early 16th century and his name lives on through the island’s airport. Opened in 1995, Hang Nadim International Airport is the most modern airport in the Sumatra region.
Indeed, a plan was mooted as long ago as the 1960s to make Batam the Singapore of Indonesia. The island has mushroomed since it was designated for industrial development, shipping, goods transshipment, warehousing and tourism in 1973. The population has grown from 6,000 to more than 200,000 in the past 30 years and the Batam Island development master plan envisages the population reaching around 700,000 by 2006.
Holiday villages, country clubs and golf courses are widespread and the resort of Nongsa, on the north eastern tip of the island, can be reached directly by ferry from Singapore.