Indonesia’s aviation industry today stands in a growing paradox. On the one hand, Indonesia is among the largest aviation markets in the Asia-Pacific region. Its archipelagic geography makes air transport not merely a mode of mobility, but a basic national necessity. Rising middle-class income, increasing social mobility, and Indonesia’s strategic position in regional tourism and trade networks reinforce aviation’s role as a backbone of national connectivity.
On the other hand, the industry continues to operate under persistent structural pressures. High operating costs, complex and fragmented regulation, infrastructure bottlenecks, uneven human resource capacity, and the looming challenge of transitioning toward sustainable aviation collectively create a fragile operating environment. The industry grows, but not always in a healthy way.
Summaries and technical findings from the global aviation community, including international airline associations, point to a consistent pattern. Indonesia’s main challenge is not a lack of political will or industry commitment. Rather, it lies in system design, weak inter-agency coordination, and inconsistent policy implementation.
This article argues that Indonesia’s aviation challenges cannot be solved through sectoral or short-term measures. What is required is structural reform in national aviation governance—comprehensive changes that address regulation, cost structure, capacity management, safety systems, sustainability pathways, and human capital development.
Regulation: Many Rules, Limited Certainty
Aviation is one of the most heavily regulated industries in the world. This is justified by the high safety risks and the broad social and economic consequences of system failure. Indonesia is not short of aviation regulations. Laws, government regulations, ministerial decrees, and technical standards exist in abundance.
Yet regulatory quantity does not guarantee regulatory certainty. Airlines and aviation service providers frequently face differing interpretations across agencies, jurisdictions, and time periods. Policy changes are sometimes introduced rapidly, with limited industry consultation, adding further uncertainty.
Regulatory uncertainty translates directly into higher costs and business risk. Every policy shift requires operational adjustments, system modifications, contractual revisions, and financial recalculations. Ideally, regulatory change should reflect continuous improvement. In practice, uncoordinated changes often become additional burdens.
At its core, this problem is structural. Aviation governance involves multiple actors: transport authorities, economic ministries, local governments, state-owned enterprises, security institutions, and environmental agencies. Without strong coordination mechanisms, policies emerge in silos.
Regulatory reform must therefore focus on harmonization and predictability. This does not mean lowering standards. It means aligning national regulations with global frameworks, conducting proper impact assessments, and institutionalizing meaningful consultation with industry stakeholders. Good regulation is not about volume, but about coherence and reliability.
High-Cost Structure: The Root of Competitiveness Issues
High operating costs remain one of the most persistent findings regarding Indonesia’s aviation sector. Cost pressures originate from multiple sources: airport charges, air navigation services, fuel prices, taxation, ground handling fees, aircraft leasing costs, and currency volatility.
No single cost component fully explains the problem. Rather, it is the cumulative effect of many cost elements that creates a heavy burden.
This reflects the absence of a system-wide efficiency perspective. Each entity in the aviation ecosystem tends to optimize its own revenue, while overall system efficiency receives less attention.
The consequences are visible in the recurring public debate over airfares. Governments face pressure to keep tickets affordable, while airlines struggle to remain financially viable.
A healthier approach is to shift policy focus from price control toward cost-structure reform. Greater transparency, international benchmarking, and consistent application of cost-based charging principles are essential. Without structural cost reform, price interventions will remain short-term fixes that risk undermining long-term sustainability.
Airport Capacity and Slots: A Distribution Problem
Congestion at major airports is often interpreted as a sign of infrastructure shortage. Technical assessments, however, suggest a more complex reality: demand concentration, suboptimal slot management, and uneven readiness of secondary airports.
Primary airports, especially in Java, carry disproportionate traffic loads, while many regional airports operate below capacity. This imbalance reflects weaknesses in integrated national network planning.
Infrastructure development remains important, but it is not sufficient. Without data-driven slot coordination, incentives for traffic redistribution, and alignment between route policies, tourism strategies, and regional development plans, congestion will persist.
Long-term solutions require collaboration among airport operators, airlines, regulators, and local governments. Capacity must be treated as a national strategic resource, not merely as an individual asset.
Safety and Security: Progress That Must Be Sustained
Indonesia has achieved significant improvements in aviation safety over the past two decades. International indicators reflect better performance compared to earlier periods. The central challenge today is consistency.
In a country with hundreds of airports and diverse operators, maintaining uniform standards is inherently difficult. Capability gaps across regions remain a reality.
Modern safety management emphasizes systems rather than individuals: data-driven oversight, non-punitive reporting, continuous learning, and risk-based management.
Safety is not solely the responsibility of regulators or airlines. It is a shared ecosystem responsibility. In this context, global industry associations play an important role in providing frameworks, data, and best practices.
Sustainability Transition: Between Ambition and Realism
Global decarbonization targets place Indonesia’s aviation industry at a critical crossroads. Indonesia has substantial potential feedstock for Sustainable Aviation Fuel (SAF), yet production ecosystems remain at an early stage.
The core problem is not lack of vision, but lack of an integrated roadmap. Energy policy, industrial policy, fiscal instruments, and transport planning often move in parallel rather than in convergence.
A credible sustainability transition requires clear incentives, regulatory certainty, and cross-sector partnerships. Gradual, pilot-based approaches are more realistic than grand targets unsupported by infrastructure and financing mechanisms.
Human Capital: The Future Bottleneck
Fleet and traffic growth are not always matched by human resource readiness. Skills gaps are emerging across multiple functions: pilots, engineers, safety specialists, airport managers, data analysts, and regulators.
This issue receives limited public attention because its impacts are not immediately visible. Over the medium term, however, human capital shortages may become the primary growth constraint.
Stronger partnerships among government, industry, and educational institutions are required to ensure curricula remain aligned with operational realities and technological change.
Toward Structural Reform
When these findings are viewed together, a clear conclusion emerges: Indonesia’s aviation challenges are structural in nature.
Five priority agendas should guide national reform:
- Regulatory harmonization and stronger coordination.
- Cost-structure reform and transparency.
- Data-driven national capacity governance.
- Continuous strengthening of safety and security systems.
- Integrated roadmaps for sustainability and human capital.
These agendas are interconnected and must be pursued in parallel.
The Role of Global Industry Associations
Global industry associations occupy a unique position. They are neither regulators nor operators, but technical facilitators.
Their greatest value lies in data, benchmarking, and technical credibility.
Indonesia should engage with them strategically, not defensively, as partners in learning and reform.
Conclusion
Indonesia’s aviation industry does not lack potential. What it requires is political courage and policy consistency to undertake structural reform.
If such reform is pursued with discipline, Indonesia will not only remain a large aviation market, but will evolve into a healthy, credible, and globally competitive aviation ecosystem.
The real question is no longer whether Indonesia is capable, but whether Indonesia is willing to choose the long path of systemic improvement.
Reference:
International Air Transport Association. (2025). IATA Annual Safety Report [Report]. IATA.
International Civil Aviation Organization. (2025). Universal Safety Oversight Audit Programme (USOAP) [Program information]. ICAO.
International Civil Aviation Organization. (2025). Standards and Recommended Practices (SARPs) [Guidance]. ICAO.
International Civil Aviation Organization. (2024). National Aviation Safety Plan (NASP) 2024–2026: Indonesia [Report]. ICAO.
