AP I signed a memorandum of understanding with publicly listed tobacco company Gudang Garam on Tuesday to develop what would be called Dhoho Kediri Airport 20 kilometers from central Kediri.

Gudang Garam’s subsidiary Surya Dhoho Investama will be in charge of developing the first-ever airport to be fully funded by the private sector in Indonesia.

AP I president director Faik Fahmi said the airport would be crucial to take some of the pressure off the overburdened Juanda International Airport in Surabaya, which is around a two-hours’ drive from Kediri. Surabaya is Indonesia’s second-largest city and a thriving economic hub.

“This is important because Juanda's current capacity is increasingly inadequate for its growing traffic. With a capacity of only 16 million [passengers a year], Juanda had to accommodate 21 million passengers in 2018," said Faik.

"East Java needs an alternative airport to accommodate and boost traffic growth as well as economic activities in the region.”

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Designated as a national strategic project, Dhoho Kediri Airport will be developed in three phases under a public-private partnership scheme with a concession period of 30 to 50 years.

Gudang Garam, via Surya Dhoho, will spend up to around Rp 10 trillion (US$732 million) to acquire 457 hectares of land needed for the airport to be built near the village of Grogol.

Earlier last month, Transportation Ministry Civil Aviation Director General Novie Riyanto said the airport would serve domestic flights, while Juanda airport would focus on international flights for the East Java area. Kediri’s airport would focus on serving passengers from cities on the southern coast of East Java, such as Kediri, Tulungagung, Trenggalek, Blitar, Madiun and Pacitan, he added.

Gudang Garam director Istata T. Siddharta said Gudang Garam had not set any specific profit target for the airport.

"As long as the airport can contribute to the region or the country, we will be happy. From the beginning we wanted this to be a long-term investment rather than only seeing it as a commercial business," Istata said on Tuesday.

"If tourism is developed in southern East Java, the airport can be for tourism. However, if industry and agriculture in East Java develop, we might also use it for cargo. So we are flexible," said Istata.

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East Java Governor Khofifah Indar Parawansa told the Post in December that the airport in Kediri would have a significant impact on economic development in several East Java regencies, such as Blitar, Tulungagung, Trenggalek, Nganjuk and Ponorogo.

“In East Java, [there is an] economic gap not only between cities and villages but also between the north and the south,” she said.

Groundbreaking on the airport is slated for April, with a target to finish the first phase of construction by April 2022. The airport is projected to serve 1.5 million passengers after the first phase of construction and eventually accommodate more than 10 million.

With a runway of 3,300 meters in length and 45 m in with the airport will accommodate bigger aircraft than the nearby Abdulrachman Saleh Airport in Malang, such as Boeing’s B777 and Airbus’s A350.