Aviation to Indonesia

Trends and opportunities

The market

Indonesia's rapidly expanding middle class is increasingly using air transportation to travel across the numerous islands within the Indonesian archipelago. McKinsey Global Institute estimates that Indonesia’s ‘consuming class’ now numbers 45 million and is forecast to increase to 135 million people by 2030. Increased purchasing power will see an increase in the desire of middle class Indonesians to travel both domestically and internationally.

Market growth has ensured Indonesia are now one of the world's largest aircraft buyers. Aircraft procurement in Indonesia between 2009 to 2013 grew at an average of 11.8 per cent per year and in 2014 Indonesia will procure at least 250 aircrafts. (Source: Indonesia Investment, Jakarta’s Soekarno-Hatta International Airport World’s 8th Busiest Airport, 22 Feb 2014)

As an example, Indonesian aviation company, Regio Aviasi Industri, plans to start production locally of passenger aircrafts in 2018, to tap local demand. Regio Aviasi Industri are working collaboratively with the National Institute of Aeronautics and Outer Space (LAPAN) and PT Dirgantara Indonesia (DI) to produce components for their planned N219 aircraft, work started in September 2014.

ASEAN Open Skies Agreement 2015

“Open Skies’ in the ASEAN context is the liberalisation of air services between the 10 ASEAN member states. Through liberalisation of existing bilateral agreements between member states, existing restrictions on airline designation, market entry/access, frequency, capacity, schedules, products, code-sharing, tariffs, ownership and control are significantly relaxed for intra-ASEAN air services operated by airlines domiciled within the ASEAN member states.”

(Source: Indonesia Infrastructure Initiative, National Strategy for the Implementation of ASEAN Open Sky Policy Stage 2 (PDF), June 2011)

The ASEAN sky agreement will be effective in 2015 for five Indonesian airports: Soekarno-Hatta (Jakarta), Juanda (Surabaya), Ngurah Rai (Bali), Sultan Hasanuddin(Makassar) and Kualanamu (Medan). The implementation of ‘ASEAN Open Skies’ will be sure to boost inter regional travel which will benefit aviation stakeholders and further increase the industry growth in Indonesia.


The newly elected Indonesian government priorities include the urgent development of infrastructure across the archipelago, aiming to develop 46 new airports by 2030, as stated in the Indonesian Ministry of Transport 2030 Airport Master Plan.

The large air traffic market will drive higher demand for maintenance repair and overhaul (MRO) and manufacturing. 70 per cent of Indonesia’s MRO is currently done in Singapore with only 30 per cent done domestically, of which 80 per cent is dominated by GMF, part of Garuda Group.

However, Indonesia is looking to further develop their MRO industry with a plan for a Hub in Batam and Bintan, just off Singapore. A growing MRO market will also increase the need for qualified aircraft engineers, technicians and mechanics. The need for MRO is set to increase at such a pace that foreign companies will continue to play a major role in providing maintenance services to Indonesian carriers.

Indonesia’s aviation industry in general is still under capacity and rapid growth is outpacing the recruitment of an adequately skilled workforce. This skills deficit is even more pressing given the upcoming ASEAN Open Skies agreement which will come into force in 2015. By 2015, Indonesia will require an additional 4000 new pilots, 7500 new engineers and 1000 new Air Traffic Controllers.

Australia, with an advanced and mature aerospace industry are well positioned to support Indonesia in this growth phase through areas as diverse as airport construction and management, aircraft maintenance, and vocational training.

Air traffic control officers and safety inspectors are in short supply offering opportunities for qualified foreign experts and technicians in this field. Although there are competing issues in the need for foreign talent and the desire by the Indonesian Government to have positions filled by Indonesians despite a supply gap.

Competitive environment

The ownership and management of airports in Indonesia is complex and divided amongst several organisations. There are 233 state owned and operated airports in Indonesia. Twenty-five of these are managed by two stated owned enterprises - Angkasa Pura (AP1) Angkasa Pura 2 (AP2). Combined they account for approximately 90 per cent of total market revenue (Source: KPMG, A guide to Airports in Asia Pacific, January 2007).

AP2 is responsible for the operations of twelve airports in the western regions and AP1 for the other thirteen in the east, including two cargo warehouses and one air traffic control centre in the eastern region of Indonesia. The majority of the other airports are owned and operated by local governments or through technical executive units under the Ministry of Transportation (164 smaller airports are operated directly by the Directorate General of Civil Aviation).

In developing some of these airports, AP1 and AP2 has partnered with foreign companies including India’s GVK Group and Korean’s Incheon Airport.

Current regulations permit foreign investors to partner with local entities when entering the non-formal education sector in Indonesia, as long as the ownership stake does not exceed 49 per cent.

Tariffs, regulations and customs


To find out the specific tariffs pertaining to the export of your product to Indonesia, you may enter the unique HS product code at (ASEAN) Tariff Finder.

Within ASEAN countries, Indonesia is the only country that has charged Aircraft spare parts under luxury goods. The Indonesia aviation industry associations have raised this issue to the relevant ministries including the Ministry of Transport, Ministry of Industry and Ministry of Finance in a bid to change this approach, most importantly in the lead up to implementation of the ASEAN Open Skies agreement in 2015.

Marketing your products and services

Market entry

In general, to successfully market to Indonesia’s aviation industry, you may wish to consider:

  • participating in major local aviation trade exhibitions
  • highlighting your international track record to customers
  • engaging a local distributor (crucial to effective business penetration)
  • visiting the market on a regular basis and investing time (relationship based market)
  • consider opening a representative office or presence
  • engaging Austrade in tailored services to help you identify opportunities or connect you with key distributors and buyers.

Representative office set up application is through to the Indonesian Investment Coordinating Board or BKPM and for your line of business, the Ministry of Trade. Clarity around business purpose is important particularly for registration and tax purposes. We can refer you to local notaries who can advise in these areas.

Based on our close interaction with Indonesian customers, Austrade notes that some would prefer to cooperate with foreign companies that have local representative office or distributors based in market. This will increase their confidence when engaging with foreign partners for after sales service.

Distribution channels

Indonesia’s aviation industry and manufacturing base is concentrated in Java and Batam.  For distribution of components and parts, Austrade can assist in connecting companies to Tier 1 and Tier 2 suppliers in market.

Links and industry contacts

The Investment Coordinating Board
Directorate General of Civil Avition, Ministry of Transport
Angkasa Pura 1
Angkasa Pura 2
Angkasa Pura Support
Angkasa Pura Logistic
Garuda Indonesia
Garuda Maintenance Facility
Dirgantara Indonesia
Air Navigation Indonesia
Indonesian Aircraft Maintenance Service Association (IAMSA)
Indonesian National Air Carriers Association (INACA)
Indonesian Air Traffic Controllers Association (IATCA)

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

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