4 December 2021
Indonesia is seeking to challenge Singapore’s Changi Airport and Kuala Lumpur International Airport (KLIA) as regional hubs via a US$6 billion (RM25.39 billion) tie-up with Indian and French airport operators.
GMR Airports Consortium – jointly owned by India’s GMR Group and France’s Aeroports de Paris Group – won a contract last week to operate Kualanamu International Airport in Indonesia’s North Sumatra province with local state-operator Angkasa Pura II.
The companies will form a joint venture called Angkasa Pura Aviasi, which will be majority-owned by Angkasa Pura II.
Angkasa Pura Aviasi will operate Kualanamu under a 25-year “strategic partnership” worth US$6 billion, according to a news release from Angkasa Pura II.
The new company plans to expand Kualanamu airport and boost annual passenger traffic from 10 million visitors pre-pandemic to 54 million — on par with that of Indonesia’s main international gateway Soekarno-Hatta Airport outside Jakarta, also operated by Angkasa Pura II.
That would still pale in comparison to Changi’s 68 million passengers and KLIA’s 62 million in 2019.
However, Indonesia hopes the GMR tie-up will eventually draw a significant number of passengers travelling between South Asia, North Asia and Australia.
“We know that Kualanamu has a very strategic position,” Indonesia’s Deputy State Enterprise Minister Kartika Wirjoatmodjo said in Parliament on Thursday.
“It has a large capacity and can be scaled up into a world-class airport.”
He added that Kualanamu can be a base “to reduce the dominance of Changi and KLIA” and said GMR Airports has committed 56 trillion rupiah (RM16.46 billion) to support the expansion.
The deputy minister did not provide a timeline for the project.
GMR Group owns and runs major airports in India, including Delhi Indira Gandhi International Airport and Hyderabad International Airport.
It is also developing airports in Cebu in the Philippines and Heraklion in Greece.
It also has a tie-up with Aeroports de Paris, which runs three airports in Paris – Paris-Charles de Gaulle, Paris-Orly and Paris-Le Bourget.
Srinivas Bommidala, chairman for energy and international airports at GMR Group, said the Kualanamu partnership signals GMR Airports’ entry into Indonesia’s growing aviation market, adding in a statement that the group is committed to “transforming the airport into an international hub in western Indonesia regions”,
Nikkei Asia has reached out to both GMR and Aeroports de Paris for comment but has yet to receive a response.
Alvin Lie, an independent aviation industry analyst, said Kualanamu’s expansion is a long-term plan with “calculated risks”, so a prolonged coronavirus pandemic and fresh concerns over the omicron variant are unlikely to affect the project.
Lie added, however, that there is much more to be done apart from expanding the airport’s capacity if Indonesia wants Kualanamu to compete with Changi and KLIA.
He noted the need to develop more tourist attractions in North Sumatra and surrounding areas, saying Lake Toba – the world’s largest crater lake and the main domestic tourist magnet in the province – is not enough.
“However magnificent an airport, if the host city or region doesn’t have attractions, people won’t come,” Lie told Nikkei. “And don’t forget that Singapore and Kuala Lumpur won’t stand idle. They too will try to defend their markets.”