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Economy

Indonesia shows lofty ambitions for Jakarta air hub

$4bn investment aims to turn crowded Soekarno-Hatta into regional powerhouse

Flag carrier Garuda Indonesia relocated international flights to the new Terminal 3 at Soekarno-Hatta International Airport in May. (Photo by Shinya Sawai)

JAKARTA -- Indonesia is pouring billions of dollars into its flagship international airport, seeking to gain an edge in the race for passengers in a region where air travel has taken off in recent years.

A decade and a half of steady economic growth backed by foreign direct investment has sent passenger traffic soaring at Soekarno-Hatta International Airport. More than 60 million people use Soekarno-Hatta each year, causing serious overcrowding at a facility designed for just 18 million.

The airport outside Jakarta has opened a third terminal in hopes of relieving the congestion. The state-owned Garuda Indonesia relocated international flights to the brand-new terminal in May, with other airlines to follow suit as early as this year.

Though tight government finances had delayed work on Terminal 3, the project was completed in August 2016 under infrastructure-focused President Joko Widodo. The facility, built by parties including the state-owned Wijaya Karya, expanded Soekarno-Hatta's capacity to an annual 43 million passengers. But this still leaves the airport short on space, forcing passengers to take buses to their planes at times.

Construction of a fourth terminal is in the planning stages, a senior official at Soekarno-Hatta operator Angkasa Pura II told The Nikkei. This, combined with renovation of existing terminals, will boost annual capacity to around 100 million passengers. Investment in these and other projects at the airport, including a third runway, is expected to total some 54 trillion rupiah ($4 billion).

Work is underway to improve access as well. A mass rapid transit network under construction in Jakarta is scheduled to open in 2019. In addition, a roughly 20km rail line slated to begin operating as early as November will let passengers travel to Soekarno-Hatta from the capital's downtown in about an hour. The airport currently can be reached only by car, bus or taxi -- a trip that can take upwards of two hours during peak times.

Regional ambitions

Indonesia's aim is to tap into Asia's fast-growing air travel market. The International Air Transport Association expects passenger traffic in the Asia-Pacific region to rise 10.4% in 2017 for a third straight year of double-digit growth. Such countries as Singapore, Thailand and South Korea are expanding air capacity as they vie to serve as regional hubs.

Indonesia is no exception to the trend. Rini Soemarno, minister of state-owned enterprises, said the goal is to put Soekarno-Hatta on a par with Singapore's much-praised Changi Airport.

The convenience of flagship airports has become a key factor in competition among countries. The difficulty of reaching Soekarno-Hatta, coupled with long lines in cramped waiting areas, at one point landed it on a travel website's list of Asia's worst airports, along with Manila's Ninoy Aquino International Airport.

But the Indonesian airport also placed seventh on U.K.-based air travel research firm OAG's most recent ranking of the world's most connected airports, one place behind Changi. By joining this connectivity to a richer lineup of commercial facilities, the government seeks to transform Soekarno-Hatta into an airport that passengers want to use.

Indonesia's trump card is a population of well over 250 million scattered across a sprawling archipelago. The hope is that making Soekarno-Hatta more convenient will encourage travelers in major domestic cities and nearby Australia to use the airport as a link to Asia and Europe.

Competition in the region is heating up. Changi will open a fourth terminal Oct. 31, lifting annual capacity from 66 million passengers to 82 million. The Philippines is expanding Clark International Airport as a second gateway in the Manila metropolitan area and is considering building a new airport as well.

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