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Indonesian aviation opposes ASEAN’s single market policy

Indonesian aviation opposes ASEAN’s single market policy

JAKARTA: Indonesia’s aviation industry has opposed the ASEAN Economic Community’s (AEC) plans for a single market by the end of next year unless the government helps reduce airlines’ costs by simplifying tax codes, curbing airport inefficiencies and reducing the cost of jet fuel, executives from airlines operating in the country said.

Under the AEC framework, the Association of Southeast Asian Nations (ASEAN) is moving towards a single aviation market through an open sky policy, which would seek to harmonise the varying trade regulations of the 10 member states with the aim of higher efficiency, better connectivity and cheaper fares.

But Indonesia’s domestic carriers have resisted fully joining a unified regional aviation market by actively lobbying the government to protect or mitigate perceived threats posed by competitors in Singapore, Malaysia and Thailand.

While the country could potentially offer foreign carriers plenty of access points, only five airports have been put forward for the open sky policy that the bloc’s member states agreed to schedule for take-off by the end of next year.

They are the Soekarno-Hatta International Airport in Banten province and airports in Surabaya, Medan, Makassar and Bali.

Airlines have taken recently to reminding the government that they are not ready for such liberalisation.

Mr Sunu Widyatmoko, president director of Indonesia AirAsia (IAA), the local affiliate of Malaysia-based AirAsia Group, said airlines operating in South-east Asia’s largest economy feel overburdened by many inefficiencies that have weakened their competitiveness and ability to offer cheaper ticket prices compared with their regional rivals, especially those from Singapore.

“We are not operating on a level playing field,” said Mr Sunu, who has been IAA chief since July 1.

“From the cost side, we lose. We are being burdened by many factors, including taxes, airport inefficiencies and, most importantly, higher fuel prices,” he said.

Mr Sunu’s remarks came during a recent informal meeting with The Jakarta Globe, at which he was accompanied by Mr Dharmadi, who sits on IAA’s board of commissioners.