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Sky-high prices for new airports

Article - April 4, 2012
Billions of dollars need to be spent to give Southeast Asia's biggest economy the top-flight airports it needs, and partnership projects with the private sector could provide the funds
Soekarno-Hatta International, which serves Jakarta, is the world’s twelfth busiest airport. Designed in the early 1980s to handle 22 million passengers annually, last year it accommodated more than 51 million people. And the number is expected to continue rising rapidly.

A major – and expensive – upgrade and expansion of the domestic and international terminals is getting underway this year, aimed at increasing the airport’s passenger handling capacity to 62 million.

However, even that is unlikely to be enough to cater to the numbers of people wishing to fly into and out of the nation’s political and economic hub in the foreseeable future. By 2025 it is estimated passenger numbers could reach 90 million a year.

There is talk of a fourth terminal and a third runway, and the government is considering building an additional, completely new airport in the Greater Jakarta area in partnership with the Japanese government.

Expansion of Soekarno-Hatta International is one of four major transport infrastructure projects being expedited this year as part of the Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3E1).

Tri Sunoko, President Director of state-owned airports operator PT Angkasa Pura II, says the 11.7 trillion rupiah ($1.3 billion) overhaul will turn Soekarno-Hatta International into a world-class facility by 2015. More than 8.2 trillion rupiah of the cost will be sourced from external funds.

“Our goal is to create a truly world-class airport in order to be able to compete with the likes of Singapore and other regional airports such as Bangkok Suvarnabhumi airport and Kuala Lumpur,” says Tri Sunoko.

“The airport will have an impressive, environmentally friendly design. It will be a modern airport, but will maintain a traditional Indonesian flavor.”

The bill for developing Indonesia’s airport infrastructure will be huge, and the government has been looking at involving the private sector through public-private partnerships (PPPs). “In the next 10 to 15 years, we need to spend 32 trillion [$3.6 billion] on building new airports,” says Deputy Transportation Minister Bambang Susantono.

Indonesia’s Bank Mandiri has pledged funding of R5 trillion towards expanding and upgrading airports run by Indonesia’s other state-owned airports operator, PT Angkasa Pura I.

Passenger capacity at Ngurah Rai, Indonesia’s third-busiest international airport, which serves the holiday island of Bali, is being more than doubled, from the 12 million passengers a year it was designed to accommodate to 25 million passengers. The four-phase project will cost an estimated 2 trillion rupiah and include a new international terminal, and is due to be completed in time for the APEC summit in Bali in 2013.

Also scheduled for completion in 2013 is the expansion of Sepinggan airport in Balikpapan, Borneo, where 1.6 trillion rupiah will be spent on raising passenger capacity to 10 million passengers. Construction of a new passenger terminal at Syamsuddin Noor airport, in South Kalimantan, will cost approximately 500 billion rupiah and is scheduled for completion in 2015.

PT Angkasa Pura I is also planning a new airport at Yogyakarta, in Central Java. A joint project with the GVK Group of India, it will cost an estimated 1.2 trillion rupiah, and is expected to open in 2013.

PT Angkasa Pura I also has a cooperation agreement with South Korea’s Incheon International Airport Corporation (IIAC) to develop commercial facilities and improve customer service at Indonesia’s second-largest and second-busiest airport, Juanda International, in East Java.