Indonesia Needs Aviation. What Makes an Aircraft Programme Viable?

INDONESIA’S AVIATION INDUSTRY · CHAPTER 1

For Indonesia, aviation connects places where geography and travel time shape access to opportunity. Its strategic importance is clear. Deciding which aircraft to develop, purchase or subsidise requires a more specific analysis.

IATA, drawing on Oxford Economics, estimates that aviation supported US$62.6 billion in Indonesian GDP and 6 million jobs in 2023, including supply-chain, employee-spending and aviation-supported tourism effects. These figures describe the wider ecosystem’s economic contribution; they do not measure aircraft-manufacturing revenue or forecast demand for a particular Indonesian aircraft. [IATA: The Value of Air Transport to Indonesia].

An aircraft programme needs its own investment case: identifiable missions, credible buyers, a feasible certification pathway and dependable support throughout its operating life. The distinction matters because a country can urgently need better air services while a particular aircraft remains an unsuitable or unaffordable way to provide them.

AI-generated editorial illustration for Chapter 1: Connecting Indonesia. The islands and connections are symbolic, not a geographic map or operating-route network.

Start with routes and missions

“Indonesia needs more connectivity” is an important policy statement, but it leaves the aircraft specification unresolved.

A dense trunk route, a secondary-city connection and a remote public-service route can have very different requirements. Passenger volumes, fares, cargo demand, frequency, runway limitations and seasonal variation all affect the appropriate aircraft.

The analysis should begin with representative missions. How much payload must the aircraft carry over the required distance? What runway and weather conditions must it accommodate? How often will it fly? Where can maintenance be performed? What happens when the schedule is interrupted?

Seat count alone tells us little. An aircraft with a low advertised cost per seat can still be expensive on a lightly occupied service. A smaller aircraft may fit demand more closely but require more frequencies, crews or movements to deliver the same capacity.

Consider a proposed connection between two secondary cities. A useful assessment would test demand in each direction, fares passengers can sustain, seasonal troughs and the value of connections to other flights. It would then compare aircraft and schedules. Starting with a preferred aircraft and searching afterwards for routes reverses that logic.

The useful comparison is the cost and reliability of delivering the required service under realistic conditions. Existing aircraft, changes to the network and, where practical, surface transport should all be considered.

Establish who can buy and operate it

A substantial potential market does not automatically produce a financeable order book.

Prospective customers must be able to introduce the aircraft without undermining their operations. A new type can require additional pilot training, maintenance capabilities, spares, tooling and operating procedures. Those transition costs belong in the customer’s business case.

Programme sponsors should understand why an operator would make that commitment. The answer might involve access to otherwise inaccessible routes, a meaningful operating advantage or a mission that existing products serve poorly. It needs to survive comparison with alternatives available when deliveries begin.

Order quality also matters. Expressions of interest, conditional agreements and firm commitments carry different evidential weight. Customer financing, delivery schedules, cancellation rights and acceptance conditions should remain visible in any assessment of demand. Ten expressions of interest should not quietly become ten assumed deliveries in the financial model.

A domestic purchase requirement may create initial demand. It can also transfer risk to an airline, lender or public budget. The programme assessment should show where that risk ultimately sits and how much support is needed to sustain the resulting fleet.

Build the case around years of service

An aircraft’s commercial performance becomes visible through repeated operation: dispatched flights, maintenance events, component failures and the practical work of keeping schedules intact.

Certification is an essential part of that journey. Its scope, required evidence, technical dependencies and intended markets should inform the programme from the outset. Treating certification as a final administrative step leaves major uncertainty unresolved.

The support system deserves comparable attention. Airlines need workable maintenance arrangements, technical documentation, trained personnel, replacement components and a reliable process for resolving problems. A competitive purchase price can lose its appeal if an aircraft spends excessive time awaiting support.

Financiers and lessors will also examine the asset beyond its first operator. They need confidence in its supportability, remarketing prospects and value over time. These considerations can affect financing terms and ultimately the operator’s economics.

Financial modelling should therefore test the complete operating proposition. Fuel, crews, maintenance, insurance, financing and downtime belong alongside acquisition cost. Maintenance-reserve payments and eventual maintenance expenditure need careful treatment so that cash requirements are visible without double-counting the same expense. Sensitivity analysis should expose how the case changes when utilisation, exchange rates, maintenance requirements or delivery timing differ from expectations.

Separate connectivity funding from industrial investment

Some routes may deliver substantial public benefit while remaining commercially unattractive. Indonesia already recognises this distinction: in a January 2024 explanation of its transport programmes, the Ministry of Transportation described subsidies for pioneer passenger and cargo air services within its effort to improve affordability and access. [Ministry of Transportation: affordable public transport].

Connectivity support should be evaluated on its own terms: the communities served, service frequency, reliability, affordability and public cost. The assessment should compare credible ways to deliver the intended access.

Supporting an aircraft-development programme serves a different purpose. It may seek engineering capability, technological options, skilled employment or an exportable product. Those objectives require their own milestones, budgets and evaluation criteria.

Both forms of support can be legitimate. Combining them without clear accounting makes it difficult to assess either one.

If a public-service route must use a particular aircraft, policymakers should identify how much funding purchases connectivity and how much supports the industrial programme. Any additional operating burden should be explicit. Communities need dependable services, while industrial investment needs to demonstrate the capabilities and commercial outcomes it promises.

Ask what the evidence justifies next

My proposed test has three parts: route fit, full-life viability and public value. A programme should be able to explain the service it improves, how it will meet its obligations over years of operation, and why any public contribution is justified.

The evidence required should strengthen as commitments grow. Early studies can explore demand and technical options. Larger development commitments require a credible certification plan, suppliers and sufficient resources to complete the work. Production expansion requires evidence on manufacturing repeatability, customer financing and support readiness.

Independent technical and commercial review is particularly valuable when a programme carries national significance. Reviewers need the authority to challenge assumptions, and decision-makers need the freedom to narrow the mission, change partners or adjust the investment schedule.

Habibie’s legacy deserves that seriousness. Indonesia’s engineering ambition is better served when aircraft enter service with customers, financing and support that can endure. Geography explains why aviation matters; the programme’s own evidence must justify the aircraft Indonesia chooses to build.