Investment Projects on Offer in Indonesia: Airport Development & Management

Posted on 12 July 2017
 

Source: Indonesia Investments

Danang Baskoro, General Director of Angkasa Pura I, said the fully state-owned firm seeks strategic partners for the management of several airports that are operated by Angkasa Pura I. The company is currently determining and formulating the requirements that it will set for the new private partners. After this stage has been completed, Angkasa Pura I will tender the projects.

Baskoro added that Angkasa Pura expects plenty of interest from foreign investors to become a strategic partner. Meanwhile, it expects that - with the help from a high-quality foreign partner - the quality of airports' services should be able to compete with the quality found at renowned Changi Airport in Singapore. Also the expertise of Angkasa Pura I should increase as it can learn valuable lessons from a quality strategic partner.

For the moment, Angkasa Pura I offers part of the management of the Sultan Aji Muhammad Sulaiman Airport in Sepinggan (the city of Balikpapan on Kalimantan) and the Lombok Praya Airport on the island of Lombok to (foreign and private) investors.

Sultan Aji Muhammad Sulaiman Airport currently has a passenger capacity of 15 million people (per year), while it only welcomed about 7 million airline passengers in 2016. Balikpapan, an important oil & gas and coal hub, saw declining passengers due to the difficult conditions in the mining sector. In 2016 a total of 63,389 flights landed or departed at this airport. 

Meanwhile, the Lombok Praya Airport on the island of Lombok is much smaller, having a capacity of 3.2 million airline passengers per year. However, in 2016 the airport welcomed 3.4 million passengers, hence it is currently handling more passengers that it was designed for, implying the need for expansion.

Another airport project that is expected to be offered to investors soon is the development of the new Kulon Progo Airport in Yogyakarta. Angkasa Pura I needs private investor(s) because it is impossible for the airport operator to finance everything through bank loans.

Kulon Progo Airport is designed to replace the existing (and congested) Yogyakarta Adisucipto International Airport. Construction of the Kulon Progo Airport was officially launched in January 2017 (by Indonesian President Joko Widodo) although physical construction is set to commence in August 2017. The whole project is expected to be completed by late 2019.

While initially Angkasa Pura I expected to require IDR 5 trillion (approx. USD $376 million) for the development of the Kulon Progo Airport, the figure is estimated to have doubled to IDR 10 trillion, excluding the IDR 4.1 trillion required for the land acquisition process. Angkasa Pura I set aside IDR 10 trillion for its budget to develop Kulon Progo Airport, which is not enough to complete the project and therefore it seeks strategic partners.

Based on existing designs Kulon Progo Airport will provide capacity for 15 million passengers per year after it has become operational. By 2031 the airport should have ten times more capacity than the existing Yogyakarta Airport. Angkasa Pura I is currently finalizing the tender for this development project.

 

Indonesia's Transportation Ministry supports the strategy of Angkasa Pura I (to seek strategic partnerships) because it will speed up much-need airport development across the nation.



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