Abstract
To say that Indonesia is an enigma in air transport is an understatement. On the one hand, the demand for air transport in Indonesia is higher in proportion to its GDP per capita. Its economy can be expected to grow 6% to 10% annually. A single aviation market could add another 6% to 10% growth in sheer demand. It is one of the wealthiest countries in the world, being the 16th richest country currently, and, according to an Airbus forecast, will be the 7th richest in 2030. Yet its airports are badly in need of expansion, its infrastructure is bursting at its seems, and above all, its airlines are strongly resisting liberalization of air transport in the region for fear of being wiped out by stronger contenders in the region. Against this backdrop, it is incontrovertible that Indonesia's civil aviation is intrinsically linked to regional and global considerations. Indonesia's archipelagic topography makes its people heavily reliant on safe, regular and reliable air services that may connect them not only internally but also to the outside world. A single aviation market in the ASEAN region will bring both benefits to Indonesia and challengers to its air transport sector. This article discusses the economic and regulatory challenges that Indonesia faces with the coming into effect of the ASEAN Single Aviation market in 2015.
Highlights
Air transport generated 1.8 million direct jobs and supported 24.2 million jobs in the Asia Pacific[1] region in 2012
Period[2] and is the region is a major player in global air transport
The Association of South East Asian Nations (ASEAN) Economic Community (AEC)[5], which has as one of its aims the creation of a region fully integrated into the global economy, and which in turn is reflective of an economic integration plan in the region, considers air transport as a critical and significant thread in the transport fabric of the region
Summary
Air transport generated 1.8 million direct jobs and supported 24.2 million jobs in the Asia Pacific[1] region in 2012. ASAM is based on two supporting agreements - The Multilateral Agreement on Air Services (MAAS) which was signed in 2005 and the Multilateral Agreement on the Full Liberalization of Passenger Services (MAFLPAS) which was signed in 2010 Both these agreements provide for the relaxation of market access (which is provided for in the Protocols of both agreements) with regard to third, fourth and fifth freedom traffic rights, to the exclusion of seventh freedom rights[9] and cabotage[10]. ASAM is fettered by the fact that, for it to come into effect, at least three ASEAN member States have to deposit their instruments of ratification or acceptance, which dispels a common misconception that AOSA transforms the region into a fully liberalized air transport sector. Even if the overall upgrade of its airports are underway, Indonesia could have the common problem of capacity demand overriding any measures taken to meet it
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