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Jakarta Post

AP II pins hope on domestic market, expects faster aviation industry recovery

  • Mardika Parama

    The Jakarta Post

Jakarta   /   Tue, August 18, 2020   /   03:31 pm
AP II pins hope on domestic market, expects faster aviation industry recovery Put to the test: Passengers line up for rapid test services at Terminal 3 of Soekarno-Hatta International Airport in Tangerang, Banten, on Aug. 12. Domestic travelers are required to present their tickets and results of their rapid test prior to departure. (JP/Dhoni Setiawan)

State-owned airport operator PT Angkasa Pura (AP) II president director Muhammad Awaluddin said he expected the aviation industry to recover by mid-2023, backed by domestic flights, slightly more optimistic than the International Air Transport Association's (IATA) projection.

The IATA stated on July 28 that it expected a full recovery of global air passenger traffic by 2024, a year later than its initial estimate, due to slow virus containment in developing economies, corporate travel cuts and weak consumer confidence during the global health crisis.

“The IATA and other international organizations assume that international travel will fully recover in 2024. However, I do believe that we can achieve that by mid-2023 as our market is dominated by domestic flights,” Awaluddin said during an online discussion held by the Indonesian National Air Carrier Association (INACA) on Aug. 13.

AP II recorded 524 flights to and from Soekarno-Hatta International Airport on Aug. 14, amid the long weekend, a record high since the COVID-19 outbreak in March. It saw traffic of more than 45,700 passengers on that day.

In comparison, Soekarno-Hatta International Airport’s flight traffic in April stood at 200 flights per day, and went down to 100 flights per day in May.

“This means that air travel patterns have been restored to normal, the number of flights during the long weekend period is usually quite high,” Awaluddin said in a separate statement on Aug. 15.

The continuous rise of COVID-19 cases in Indonesia has depressed the tourism and aviation sectors, as people cancel travel plans amid large-scale social restrictions (PSBB).

In its forecast, the IATA expected the number of global air passengers to be down 55 percent year-on-year (yoy) in 2020. The figure was worse than its initial April forecast of a 46 percent decrease yoy in air passenger numbers.

“Consumer confidence is depressed and not helped by the UK’s weekend decision to impose a blanket quarantine on all travelers returning from Spain. And in many parts of the world infections are still rising,” IATA director general and CEO Alexandre de Juniac said in a statement on July 28.

“All of this points to a longer recovery period and more pain for the industry and the global economy.”

National flag carrier Garuda Indonesia painted a rosier projection than AP II and IATA, with the airline’s analysts predicting a full rebound by 2022, according to the company’s president director Irfan Setiaputra.

However, Irfan said he believed the situation would remain challenging in 2022.

“Our analysts believe that a rebound in the aviation industry will take two years. However, I think it would remain challenging by that time as the [COVID-19 pandemic] has brought a seismic shift to the industry,” he said during the discussion.

Garuda Indonesia posted a US$712.73 million loss in the first half of this year after booking a net profit of $24.11 million in the same period last year as the COVID-19 pandemic forced the company to cut its flight frequency, affecting the company’s revenue and profit.

The airline’s total revenue in this year’s first six months nosedived 58.2 percent yoy to $917.28 million, according to the company’s financial report on the Indonesia Stock Exchange (IDX).

Read also: Garuda turns in first-half losses as pandemic hits aviation

During the INACA discussion, Irfan said aviation consumers' behavior would completely change for years to come, and airlines must actively adapt to the consumers’ desires and intentions in order to survive.

“We can't put our hopes on everything getting back to normal even after the COVID-19 pandemic is over. This crisis will change the way people travel and their expectations,” he said.