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Robust local economy to fuel demand for air travel: INACA
JP/IrmaA booming economy at the provincial level, coupled with an expected global economic recovery, is becoming the main driver of growth in the local airline industry next year, an association says
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JP/Irma
A booming economy at the provincial level, coupled with an expected global economic recovery, is becoming the main driver of growth in the local airline industry next year, an association says.
Chairman of the Indonesia National Air Carriers Association (INACA) Emirsyah Satar told The Jakarta Post recently that because Indonesia’s economy remained heavily dependent on the local economy, local airline operators would tap more opportunities from business activities at the provincial level.
“This year, the legislative and presidential elections helped keep local airline operators afloat amid the global financial crisis.
But next year, the driver will be economic activities at the provincial level,” said Emirsyah who is also president director of state-owned flag carrier Garuda Indonesia.
Emirsyah forecast growth in domestic passenger traffic will reach as much as 10 percent this year
and at least another 10 percent next year.
According to the Transportation Ministry, domestic passenger traffic reached 46.3 million flights in 2008.
Domestic flights account for 60 to 70 percent of all services provided by the country’s aviation industry.
Emirsyah also said international air travel was expected to start recovering next year from the
current 8 percent decline in passengers and to reach upwards positive growth.
The number of international passengers traveling in or out of Indonesia topped 3.37 million last year, according to the ministry.
A roadmap designed recently by the Indonesian Chamber of Commerce and Industry (Kadin) has forecast the revival of the provincial economy to help fuel national economic growth despite an expected sluggish international market, including international business travellers into Indonesia.
Kadin believes that increased economic activities have started to reach the provinces outside Java since 2007, and are likely to gain better momentum next year as more business infrastructure is expected to be built, coupled with stable security and political conditions.
While Jakarta and Java now account for 55 percent of the national gross domestic product (GDP), this trend is likely to diminish as North Sumatra, Riau and Jambi will play a greater role as economic powerhouses in agriculture, particularly in palm oil, according to Kadin.
East Kalimantan will strengthen to become a hub for mining, oil and gas along with the Riau Islands.
The lobby group also indicated a shift in the spread of financial benefits from accumulating mainly in Jakarta towards accumulating in other provinces outside Jakarta, as indicated by shrinking third party funds in Jakarta banks.
It was not until 2007 that Jakarta lost its decades-long dominance in contributing the lions share of bank’s third party funds, falling from 67 percent to 36 percent of the total.
Provinces in Sumatra and the eastern part of Indonesia now account for more of these funds, according to Kadin. This means
more people in these areas have managed to set aside some of their income in banks as they are getting more prosperous.
This reflects that Indonesia is rich in natural resources, including palm oil, coal, tin, gold, spices, nickel, gas, and oil and that more of this wealth is now being retained in the provinces.
