In a recent report on The Jakarta Post, Indonesia's government is considering opening up the domestic travel market to foreign carriers.
The proposal, first suggested by Indonesia's President Joko “Jokowi” Widodo, would open up more competition and possibly reduce airfares.
“We will not easily accept all foreign airlines. Our aviation industry must still have high [standards]. Therefore, we are studying the proposal and we will report [the results of a study] to the President before making a decision,” Indonesia Transportation Minister Budi Karya Sumadi said in Jakarta on Monday as quoted by kompas.com.
Should foreign airlines be allowed to operate domestic flights in Indonesia, Budi did stress they would have to abide by Indonesia's Cabotage laws which require Indonesian nationals having a 51% ownership of the entity in the country.
Fares for domestic travel in Indonesia has been among the aviation/travel developments in the country, where the government has intervened in a bid to lower airfares. Recently, Indonesia's government reduced the price ceiling of domestic flights by 12 to 16 percent.
Indonesia's aviation industry has two major players making up the majority of domestic air travel. The first being Garuda Group which owns national carrier Garuda Indonesia as well as Citilink, Sriwijaya and Nam Air. The other major player is the Lion Group that owns Lion Air, Batik Air and Wings Air. Both the Garuda and Lion Groups have share of around 60% of the domestic travel market in the country. Indonesia does have the presence of Malaysian-based AirAsia through its local subsidary Indonesia AirAsia and its long-haul affiliate Indonesia AirAsia X which accounts for less than 10% of the market.