T

he country'€™s air cargo industry is expected to benefit from the multilateral agreement on the opening of freight services between ASEAN countries, a move that promises to help increase air cargo volume by 50 percent this year.

Indonesia National Air Carriers Association (INACA) head of cargo division Boyke P. Soebroto said that the multilateral agreement would broaden the market for Indonesian air cargo service providers.

Prior to ASEAN Open Skies, also known as the ASEAN Single Aviation Market (ASEAN-SAM), Indonesian cargo planes were required to stop over in countries like Singapore, as a hub, en route to a final destination,

'€œFor example, there wasn'€™t a direct [air cargo] flight from Jakarta to Hanoi but, with the liberalization, we can fly directly from Surabaya to Hanoi,'€ Boyke said.

'€œThis is a chance for Indonesian air cargo service providers to get into ASEAN industrial centers, both for imports and exports.'€

Citing data, he said the country'€™s international air cargo shipping volume stood at around 80,000 tons in 2014, just one-fifth of domestic air cargo shipping which booked 400,000 tons during the same year.

Air cargo volume decreased by 5 percent in 2015 due to the slowing economy, according to INACA data.

'€œBut for this year, as we will have direct flights, I think it [volume] will increase by 40,000 tons,'€ he said.

Service providers in the country, according to Boyke, would likely aim to increase air cargo shipping to Hanoi and Saigon, among others.

Indonesia ratified the multilateral agreement on the full liberation of air freight services in July last year.

The agreement, first approved by ASEAN in 2009, was implemented with the ASEAN Economic Community (AEC) this year.

In the agreement, Indonesia is to open seven cities to incoming and outgoing freight services, including Palembang, South Sumatra; Manado, North Sulawesi; Makassar, South Sulawesi and Biak, Papua.

Meanwhile, the Philippines has promised to open six of its cities, including Cebu, while Thailand plans to open seven cities, including Bangkok and Phuket.

The agreement grants fifth freedom to freight service providers, meaning that an airline from one country has the right to fly between two different ASEAN countries, carrying revenue traffic between the two.

'€œBefore ASEAN Open Skies, cargo shipping had been focused in Singapore, Thailand and Malaysia. Indonesia was left behind,'€ he said.

However, he admitted that the cargo service in Indonesia had been limited, with only half of 27 registered freight planes currently in operation.

The main operational area for cargo airlines was also limited to Papua, in cities like Jayapura and Wamena.

'€œI think there will be two additional cargo service planes this year,'€ Boyke said.

The association was also sure that the local industry would be able to produce goods to be exported abroad through a local cargo plane service.

Boyke said that the agreement could help producers to sell products at a competitive price.

'€œTuna producers, for example, they can export from Manado to Manila, which is already close to Japan, making the product cheaper to sell,'€ he said.

However, the country recorded its first trade deficit in November last year, with exports dropping 7.91 percent to US$11.16 billion.

Aviation expert Arista Atmadjati said that the INACA estimate was overly optimistic, citing that fierce competition from foreign airlines and the country'€™s lack of scheduled cargo airlines were factors likely to hamper growth.

'€œSingapore [airlines] has one of its Boeing 747-400 going to Jakarta. It can carry up to 50 to 60 tons at once. Indonesian customers are more comfortable to distribute goods through that kind of service,'€ Arista said, adding that foreign airlines such as Malaysian Airlines and Thai Airways also provided such freight services.

Currently, scheduled cargo airlines operators in Indonesia are limited to three airlines including Cardig Air and Tri-MGIntra Asia Airlines.

He said that, to date, outbound shipping figures had been dominated (or 60 percent) by foreign airline service providers.

A reasonable volume increase estimate would be around 15 percent to 20 percent, according to Arista.

'€œWe are still limited to the domestic market, but we should maximize that too,'€ he said.