Charter Flight Cancellations and Regular Service Uncertain... This Obstacle Blocking Indonesia Routes

Jeju Air and Others Launch Charter Flights
Aiming for Batam as Well as Jakarta and Bali
'Obstacle' Is Traffic Rights... Clear Differences in Views Between Both Countries
Profit Issues and Strict Korean Visa Conditions Also Present Challenges

LCCs (Low-Cost Carriers) are making efforts to launch routes to Indonesia, where passenger demand is high, in order to generate new revenue. However, due to differences in positions between the Indonesian and Korean governments regarding traffic rights, which are the rights to operate flights, launching new routes is not easy.

Last May, Jeju Air operated a charter flight to Indonesia for the first time as a Korean LCC. They collaborated with travel agencies to create travel packages linked to golf tours, achieving a load factor of 76%. The flight landed on Batam Island in the Riau Islands of northern Indonesia. Batam has mild weather year-round and ten golf courses, including six 18-hole courses, attracting many golf tourists. Located opposite Singapore, it is accessible by a 40-minute ferry ride. It is an area of government interest, having been designated as a free trade zone for the first time in Indonesia. At that time, this flight was the first operated by a Korean carrier to land on Batam Island.

On the 22nd, remodeling work is underway at Terminal 1 of Hang Nadim Airport in Batam, Indonesia. Recently, Batam Airport Operations Co., Ltd., a subsidiary of Incheon International Airport Corporation, has entered this area and is promoting remodeling and new airport construction projects. Photo by Airport Photographers Group

There is strong demand from airlines for this route. Indonesian LCC Lion Air is in discussions with Incheon International Airport Corporation to operate charter flights for one month starting January next year. Lion Air previously operated charter flights for one month from 2017 to 2018, with a load factor of 96.4%, carrying 5,902 passengers out of 6,120 available seats. T’way Air has also expressed interest in launching flights at Incheon International Airport.

Demand for Indonesian routes (Jakarta and Bali) is considerable beyond Batam. In 2019, just before the COVID-19 pandemic, there were 3,810 flights carrying 885,526 passengers. After the pandemic, from January to October this year, 2,453 flights carried 584,972 passengers to Indonesia.

The reason LCCs are interested in Indonesian routes is that Indonesia is the furthest country reachable by their medium-range aircraft. The recently introduced B737-8 by Jeju Air is a representative example. They plan to enter the Indonesian market, which is currently dominated by Korean carriers Korean Air and Asiana Airlines, and attract customers with reasonable prices.

On the 22nd, domestic passengers were checking in at Terminal 1 of Hang Nadim Airport in Batam, Indonesia. Recently, Batam Airport Operation Co., Ltd., a subsidiary of Incheon International Airport Corporation, has entered this area and is promoting remodeling and new airport construction projects. Photo by Airport Photo Journalists Group

However, there are many obstacles to establishing regular scheduled routes. First, there is a difference in stance between Korea and Indonesia regarding traffic rights for the routes. Indonesia wants to develop tourist destinations other than the famous Jakarta and Bali. The government is promoting the so-called ‘Ten Bali’ initiative, aiming to create more than ten tourist destinations similar to Bali. They want to develop airport routes to destinations other than Jakarta and Bali, with Batam being a strong candidate. Batam is one of Indonesia’s top three tourist destinations and has been designated as a free trade zone by the government. Its central location among Indonesia’s many islands gives it high potential to grow as a hub airport within Indonesia. However, the Korean government reportedly wants to increase flight frequencies on the popular Jakarta and Bali routes. Due to these differences, the aviation talks between the two governments held in June ended without agreement.

Another obstacle is that the routes are not immediately profitable. Jin Air planned to operate one charter flight from Incheon International Airport to Batam Island in December but canceled it. Jin Air and Incheon International Airport Corporation had signed an MOU (Memorandum of Understanding) promising incentives to LCCs upon route launch. According to the MOU, charter flights can be operated at any desired time, so the company does not incur losses. Jin Air reportedly redirected the charter aircraft intended for the Batam route to the Japanese route, where demand has surged.

In other words, deploying aircraft on Japanese routes is more profitable than flying to Batam. Recently, local governments in Japan have been actively attracting airlines by providing subsidies to attract Korean tourists.

Another reason LCCs hesitate is the difficulty Indonesian nationals face in traveling to Korea. The visa issuance process is complicated. Indonesian nationals must obtain a travel visa to visit Korea. However, the Korean consulate responsible for issuing visas is located in Jakarta, so agencies must be used to handle the process. It takes more than a week to issue a visa, and the cost is about 200,000 KRW. Additionally, visa issuance conditions are strict, requiring travelers to have a certain amount of money (over 10 million KRW) in their bank accounts.

This content was produced with the assistance of AI translation services.