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New airlines’ entry a gamble in domestic market headwind
The government has long sought after new airlines, hoping to improve competition and lower airfares in the country’s duopoly aviation market. Flag carrier Garuda Indonesia and Lion Air are estimated to serve between 70 and 80 percent of domestic passengers annually.
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Illustration of Fly Jaya's fleet (Fly Jaya/-)
E
xperts and industry players balk at the notion that the entry of three new private airlines this year will lead to a rebound in air travel as the industry struggles to regain its pre-pandemic footing.
Newly established carriers, namely Fly Jaya, Indonesia Airlines and Mukhtara Air will be wading into a high-risk domestic market where softening demand, soaring operational costs and outdated policies had stunted recovery, they warn.
Even established players have been feeling the strain and some had scaled back operations as costs outpaced revenue, according to aviation industry expert Alvin Lie, who also chairs the Association of Indonesian Aviation Service Users (Apjapi).
“The Indonesian market is hardly attractive for newcomers. With existing players cutting back operations, that’s just keeping us stuck in the mud,” Alvin told The Jakarta Post on March 27.
Alvin said this had led Lion Air, the country’s largest private carrier, to move part of its fleet to Malaysia and Thailand, where “profits are higher and the market is steadier.”
Last year, Indonesian domestic passengers amounted to 62.56 million, growing 1.76 percent from last year, according to Statistics Indonesia.
Read also: New carriers Indonesia Airlines, Fly Jaya set to take off in 2025
