New airlines entry a gamble in Indonesian domestic market headwind

Experts and industry players balk at the notion that the entry of three new private airlines this year will lead to a rebound in air travel as the industry struggles to regain its pre-pandemic footing. Newly established carriers, namely Fly Jaya, Indonesia Airlines and Mukhtara Air will be wading into a high-risk domestic market where softening demand, soaring operational costs and outdated policies had stunted recovery, they warn. Even established players have been feeling the strain and some had scaled back operations as costs outpaced revenue, according to aviation industry expert Alvin Lie, who also chairs the Association of Indonesian Aviation Service Users. “The Indonesian market is hardly attractive for newcomers. With existing players cutting back operations, that’s just keeping us stuck in the mud,” Alvin told The Jakarta Post on March 27. Alvin said this had led Lion Air, the country’s largest private carrier, to move part of its fleet to Malaysia and Thailand, where “profits are higher and the market is steadier.” Last year, Indonesian domestic passengers amounted to 62.56m, growing 1.76% from last year, according to Statistics Indonesia. Indonesia’s aviation sector welcomes Jakarta-based PT Surya Mataram Nusantara, operating as Fly Jaya, which had secured an Air Operator Certificate (AOC), Transportation Minister Dudy Purwagandhi said in March, Bisnis.com reported. PT Mukhtara Indonesia Air, the local subsidiary of Saudi Arabia-based Manazil Al Mokhtara Group, has reportedly started its licensing process. Its official website said it already had a head office close to Soekarno Hatta International Airport in Banten, and was recruiting engineers and flight operation managers.<br/>