T

he Transportation Ministry is expected to issue a ministerial regulation authorizing private companies to operate commercial airports, a move seen as paving the way for Lion Group to take over the management of Halim Perdanakusuma Airport in East Jakarta from state-owned airport operator Angkasa Pura II (AP II).

The ministry'€™s legal division head Umar Aris said on Monday that the ministerial regulation would set operational rules for private companies in operating an airport, based on Law No. 1/2009 on flight services.

'€œThe regulation will set out rules for private firms in operating airports. It will set boundaries for them,'€ Umar said.

The regulation would be issued after being signed by the incoming transportation minister. '€œIt is expected to be issued next month,'€ he continued.

Lion Group had earlier said it would begin a Rp 5 trillion (US$436 million) expansion project at Halim in November, with state-owned construction company PT Adhi Karya assigned to the construction.

The expansion is expected to be completed in July next year, when Lion Group will officially take over the management of the airport. Without the ministerial regulation, the group would be unable to operate Halim.

The ministry'€™s airport director Bambang Tjahjono confirmed that Lion Group had submitted a written statement to the ministry two months ago expressing its interest in operating Halim.

According to Bambang, AP II'€™s permit to operate Halim has not been renewed since 2002. He said the permit was supposed to be evaluated every five years by the ministry. The last time the permit was renewed was in 1997, according to Bambang.

By the time the permit expired in 2002, the ministry no longer had the sole authority to assign AP II to operate the airport, following the establishment of the State-Owned Enterprises Ministry in 1998.

'€œSince the State-Owned Enterprises Ministry was established, the permit to operate Halim should have been evaluated by both the Transportation Ministry and the State-Owned Enterprises Ministry,'€ Bambang said.

'€œThe permit was not renewed until Inkopau [the Air Force'€™s central cooperative] formed a joint venture with Lion Group to operate the airport a few years later, giving a chance to Lion to take over the management,'€ he continued.

As reported, in 2004 Lion Group and Inkopau formed a joint venture, named PT Angkasa Transportindo Selaras, in which the airline controls 80 percent of the stake and the remaining stake is owned by the cooperative.

The 21-hectare plot of land at the airport was owned by the Air Force and Lion Group secured a 25-year contract to operate it. The agreement became effective in 2006, according to Lion.

According to state-owned enterprises expert Said Didu, the agreement between Lion Group and Inkopau had violated the 2004 Indonesian Military (TNI) Law, which mandated the Air Force to complete the handover of businesses to the government by 2009.

'€œHanding over state assets from the Air Force to Inkopau definitely violated the law,'€ Said said. '€œThe 2004 TNI Law states that the TNI is prohibited from running businesses, be it directly or indirectly,'€ he continued.