Fewer People Flying Domestically

(11/22/2008)

Uncertain oil prices and a worsening global financial crisis have prompted Indonesian aviation industry observers to project a potential downturn of between 10 and 15% in passenger totals in by year end 2008. Foreshadowing this downturn, only 23 million passengers were carried by Indonesian carriers through the end of September 2008. This compares with a total of 37 million passengers who flew in 2007.

As reported by Kompas, the Secretary General of the Indonesian National Air Carrier Association (INACA), Tengku Burhanuddin, is admitting that growth in the national airline industry remains elusive with most INACA members struggling to maintain current load levels. Explained Burhanuddin, “in the last three months of this year (2008), we will only be able to secure 30 million passengers." He blames the current lethargy in air passengers on the high cost of fuel which has caused travelers to seek alternative forms of transport - such as trains, busses and ships.

This change in consumer preference for transport was highlighted during the just completed Idul Fitri holidays where a projected growth of 10% in passenger totals did not materialize, ending the holiday period with a concerning 17% decline in total air passengers.

Despite optimistic projections of growth in Indonesian air passengers of between 16-20% for 2008, the numbers at the end of the year may be more reflective of a stagnant market situation.