Indonesia Angkasa Pura II's Silangit Airport & Sumatra's tourism

Summary

• Silangit Airport is one of the fastest growing airports in Indonesia but is small, handling less than 300,000 passengers in 2017.
• Silangit is well positioned for rapid growth as Indonesia works to boost international tourism at nearby Lake Toba.
• Silangit Airport completed a terminal expansion and runway extension in 2017 and is planning to complete another terminal expansion and runway extension by 2020.
• Silangit Airport now has international designations, but upgrades are needed to support regular international flights and a potential international hub from Indonesia AirAsia or Lion Air.

Up and coming destinations and new secondary airports in Southeast Asia will be a topic of a panel discussion at the CAPA Asia Aviation Summit in Singapore on 8/9-Nov-2018. For more details on the summit click here.

Silangit Airport provides easier option for accessing Lake Toba

Silangit Airport is located in Siborong-Borong, a small relatively undeveloped subdistrict of North Sumatra province. Sumatra is the largest island in Indonesia and is the second most populated island in Indonesia after Java. Sumatra, known for its ruggedness and natural beauty, consists of eight provinces with a total population of approximately 50 million.

Medan is by far the largest city on Sumatra and is the capital of North Sumatra, the most populated province. Silangit Airport is located in a rural part of North Sumatra near Lake Toba, one of the most famous tourist destinations in Indonesia.

Lake Toba visitors have historically flown into Medan from other parts of Indonesia and overseas. However, Silangit Airport offers a much more convenient option as it is a short drive to Lake Toba and the resorts on Samosir Island, which is located within the lake. The journey from Medan's Kuala Namu International Airport to Samosir is approximately five hours.

Silangit is a very small airport but has been growing rapidly

Silangit is the 43rd largest airport in Indonesia and the ninth largest on Sumatra, based on 2017 passenger data from the Indonesia's DGCA. Silangit Airport handled less than 300,000 passengers in 2017, compared to nearly 10 million for Medan's Kuala Namu Airport.

However, Silangit is one of the fastest growing airports in Indonesia. Passenger traffic at Silangit increased by 85% in 2017. In 2015, Silangit handled only 18,000 passengers. At the time Silangit was only served by small air taxi operators.

Passenger traffic increased to 151,000 passengers in 2016 as Garuda Indonesia, Sriwijaya Air and the Lion Group turboprop subsidiary Wings Air launched services. Lion Group's full service subsidiary Batik Air and the Garuda LCC subsidiary Citilink began serving Silangit in 2017.

Silangit Airport annual passenger traffic: 2014 to 2017

2014	2015	2016	2017
23,215	17,765	150,777	278,777

Source: CAPA - Centre for Aviation and Indonesia DGCA.

Five airlines currently serve Silangit

Batik, Citilink, Garuda and Sriwijaya now compete in the Silangit-Jakarta market. Each airline currently operates one daily flight on the route.

Batik and Citilink uses A320s on the route, while Sriwijaya uses smaller 737-500s and Garuda uses CRJ1000 regional jets. Citilink operates the route from Jakarta's Halim Airport and Garuda, Sriwijaya and Batik operate from Jakarta's main airport, Soekarno-Hatta.

Wings Air currently operates one daily flight on the short Silangit-Medan route using ATR 72 turboprops. Garuda competed against Wings on the Silangit-Medan route with three weekly ATR 72 flights until earlier this month.

Susi Air until 2016 was the only airline serving the Silangit-Medan route - and was the only airline in the Silangit market. Susi only operates tiny single engine aircraft (mainly nine-seat Cessna Caravans) and is no longer operating Silangit-Medan.

Silangit Airport expanded in 2017

Silangit Airport opened an expanded terminal in Apr-2017 with capacity to handle 500,000 passengers per annum. A runway extension was completed in Sep-2017.

The airport expects to reach 500,000 annual passengers by 2019. Indonesian authorities are already planning to expand the airport further as part of an initiative to promote Lake Toba as a major international tourist destination.

Lake Toba has been a popular holiday destination for domestic tourists for years. However, access issues and infrastructure constraints have made it difficult to attract international visitors.

Lake Toba currently attracts approximately 250,000 foreign visitors per annum, with most tourists staying on Samosir, which is located in the middle of the lake. Tourism authorities aim to boost annual foreign visitor numbers to 1 million within the next few years.

Silangit Airport gains international designation

Expansion of Silangit Airport is a key component of an initiative by the Indonesian and North Sumatra governments to increase tourism in the Lake Toba region. Silangit Airport gained international status in 2017 and Indonesia president Joko Widodo inaugurated the new international facility in Nov-2017, which highlights the government's commitment to developing tourism at Lake Toba.

At the inauguration, President Widodo stated that a further expansion of Silangit Airport would be completed by 2020. Under the expansion plan, the runway will be further extended, from 2650m to 3000m, and the terminal will be further expanded, from 3,000sqm to 10,000sqm. The apron, which is now very tight, will also be expanded to accommodate up to four aircraft simultaneously.

The expansion is necessary for Silangit to attract regular international services. The airport so far has only handled a batch of 10 international charter flights that were operated to Singapore by Garuda in late 2017.

Silangit could become an international hub

Indonesia's four main airline groups - AirAsia, Garuda, Lion and Sriwijaya - are all considering the launch of new routes to Silangit, including international services.

AirAsia does not yet serve Silangit but its Indonesian affiliate is considering a base or hub at Silangit that would support several international flights. The Lion Group has also stated its interest in opening an international hub at Silangit, most likely using its LCC subsidiary Lion Air. The Lion Group currently only serves Silangit using the Batik and Wings Air subsidiaries.

India and China are the main international target markets for Silangit, although several regional international routes within Southeast Asia are also expected.

It is unlikely Silangit could support a hub operation until the latest expansion project is completed, potentially in 2020.

Silangit-Singapore route made possible with subsidies

Silangit has so far only handled 1,300 international passengers. All these passengers arrived on the 10 charter flights operated to and from Singapore by Garuda in late 2017. The first of these flights landed in Silangit on 28-Oct-2017.

The Singapore-Silangit flights were sold by travel agents in Singapore as part of tour packages, which were subsidised by the Indonesian government. Garuda is willing to operate more charter flights between Silangit and Singapore but only with government support, as it does not believe the service can be profitable at this point without subsidies.

The cost of operating flights from Silangit to Singapore is relatively high, due to payload limitations from Silangit and high fees at Singapore. Garuda has 96 seats on its CRJ1000s but was only able to sell 60 to 70 seats on the Silangit-Singapore sector because of aircraft limitations.

Almost all of the available seats (after taking into account the payload restrictions) were successfully sold, but at very low fares. Without the subsidies, the flights would not have been profitable.

The planned runway extension should make the Silangit-Singapore route more viable. Garuda also believes further service improvements at the airport are needed before scheduled international services can be considered.

Silangit has international potential

Indonesia will need to invest in permanent immigration facilities and staffing at Silangit. It should also consider expanding its visa free programme to Silangit - Indonesia offers visa free access to for 50 nationalities but only at select international airports, including Medan.

Silangit has the potential of becoming one of the largest international airports in Indonesia, given the popularity of Lake Toba. However, it will take time to develop the necessary infrastructure - both at Silangit Airport and throughout the Lake Toba region.

Medan is the third largest international airport in Indonesia, after Jakarta and Bali. However, Medan handled a relatively modest 2 million international passengers in 2017.

The other four international airports in Sumatra (including Silangit) handled less than 1 million international passengers combined. The top 10 airports in Sumatra handled over 25 million domestic passengers combined in 2017, but less than 3 million international passengers.

Top 10 airports in Sumatra ranked by passenger traffic: 2017

Rank	City	Province	Domestic passenger traffic (in millions)	International passenger traffic (in millions)
1.	Medan (Kuala Namu)	North Sumatra	7.56	1.99
2.	Palembang	South Sumatra	4.42	0.17
3.	Padang	West Sumatra	3.66	0.23
4.	Pekanbaru	Riau	3.58	0.28
5.	Bandar Lampung	Lampung	2.47	N/A
6.	Jambi	Jambi	1.74	N/A
7.	Bandar Aceh	Aceh	0.95	0.19
8.	Bengkulu	Bengkulu	0.40	N/A
9.	Siborong-Borong (Silangit)	North Sumatra	0.28	0.01
10.	Sibolga	North Sumatra	0.16	N/A

Source: CAPA - Centre for Aviation and Indonesia DGCA.

Silangit should be able to support several international routes early next decade, considering the investments the government is making to develop tourism in Lake Toba, including airport upgrades.

The growth will be gradual and not sudden, but is inevitable as long as the government continues to promote Lake Toba as an international destination.