Indonesia’s President Joko “Jokowi” Widodo has submitted a proposal to the transportation ministry to allow foreign airlines to serve domestic routes as a way to reduce airfares. The proposal is under review at the transportation ministry.
According to the transportation minister, foreign airlines wishing to operate in the country would be obliged to follow strict rules, such as the Cabotage principle, which would mean foreign companies would have to establish a company in Indonesia with 51% shares owned by Indonesian nationals. Additionally, companies would be subjected to regular airworthy checks by the transportation ministry to ensure flight safety and security.
Businesses have welcomed the proposal, noting it would enhance competition and benefit the country’s tourism industry. Currently only two major players dominate domestic routes, namely Garuda Group and Lion Group.
However, an international law expert at the University of Indonesia has warned the government against opening up its skies to foreign airlines, mainly citing potentially negative long term impacts such as the death of the domestic airline industry and future difficulty stopping further entry of foreign airlines into the country, including potential acquisition of domestic airlines.
(Source: The Jakarta Post; Channel News Asia)
