The Indonesia National Air Carrier Association (INACA) expects domestic and international air passengers in Indonesia to grow by about 8-9 percent year-on-year (y/y) in 2016, flat from the estimated growth pace this year (8 percent y/y). Based on the latest data from Indonesia's Statistics Agency (Badan Pusat Statistik/BPS), air passengers in Indonesia stood at 67.5 million in the first ten months of 2015, up 12.8 percent from the number of air passengers in the same period last year.

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After Indonesian authorities threatened to suspend the operating license of the Indonesian unit (Indonesia AirAsia) of Malaysia’s budget carrier AirAsia, shares of the latter (AirAsia Berhad) on the Kuala Lumpur Stock Exchange plunged over 12 percent on Wednesday morning (08/07). Indonesia AirAsia is among 13 Indonesian airlines that were found to have negative equity and were ordered by the Indonesian Transportation Ministry to turn this positive before 31 July 2015 in order to retain their operating licenses.

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Budget airline Indonesia AirAsia, the local unit of Malaysia's AirAsia and one of the world's leading low-cost carriers, seeks to collect up to USD $250 million over the next two years through an initial public offering (IPO) on the Indonesia Stock Exchange (IDX) as well as the issuance of convertible bonds. The company aims to raise around USD $110 million worth of convertible bonds (which will have a low coupon rate with a 2-year maturity), while the IPO (which is scheduled for 2017) is expected to generate about USD $150 million.

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Small Indonesian airlines face difficult times ahead of the implementation of a new law (UU No. 1 2009 on Aviation) which stipulates that per 1 July 2015 all Indonesian airlines have to operate at least ten aircraft. Of this ten airplanes, at least five aircraft have to be owned by the airline, while the remainder can be leased. The Indonesian government emphasized that if domestic airlines fail to comply with the new law per July 2015, then their flight permits will be revoked.

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Good news for Indonesia's aviation industry and Indonesian airlines. After a nearly decade-long ban, the US aviation regulator (Federal Aviation Administration, or FAA) finally allows Indonesian airlines to enter US airspace again. The ban was imposed in 2007 due to safety concerns. The FAA announced on Monday (15/08) that the safety status of Indonesia's aviation industry was upgraded by one notch to category 1. This opens doors for Indonesian airlines to serve flight routes to the USA as well as code shares with US airlines.

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The spotlights are again turned on low-cost carrier Lion Air, Indonesia's largest privately-held airline that controls about 40 percent of the air passenger market in Indonesia. The airline, owned by Rusdi Kirana (one of the richest Indonesians), has again disappointed thousands of passengers due to delayed flights. This time flight delays were caused by Lion Air pilots going on strike. It is worth to zoom in on this case and to take a look at which Indonesian airlines are most reliable in terms of departure punctuality.

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Indonesian flag carrier Garuda Indonesia, the nation's top class airline, targets to fly 27.5 million people in 2016, up 10 percent year-on-year (y/y) from the airline's total number of air passengers last year. Passenger growth is supported by the arrival of five new wide-body airplanes in 2016. The company, listed on the Indonesia Stock Exchange but majority-owned by the Indonesian government (60.6 percent), is particularly eager to boost the number of international passengers.

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In line with the implementation of the ASEAN Economic Community (AEC) by the end of the year, the ASEAN Open Skies policy (also known as the ASEAN Single Aviation Market) should become fully effective later this year. The ASEAN Open Skies policy, a key component of the AEC, involves the multilateral agreement of all ten ASEAN countries to unite their skies into a single aviation market (hence liberalizing rules and regulations to a large degree) in a bid to boost the region’s economic growth.

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While Indonesia is still mourning for the lives that were lost in the military plane crash in Medan (North Sumatra) on Tuesday (30/06), the Indonesian Transportation Ministry threatens to suspend operating permits of 13 Indonesian airlines that are being plagued by negative equity, raising concerns about these airlines’ safety practices. The Transportation Ministry reviewed audited financial reports of 60 local carriers. These airlines will have time until 31 July 2015 to adjust their balance sheets.

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