Indonesia considers merging airport operating companies Angkasa Pura I and Angkasa Pura II


It has always seemed a little strange that where Thailand, Malaysia and Vietnam each have one main organisation to manage their airports, Indonesia has two. There may be historical reasons for it, but they are increasingly anachronistic.

API manages 15 airports across Indonesia and APII manages 20. Both are wholly state-owned enterprises under the Indonesian Department of Transport.

API is responsible for the operation and development of certain airports in central and eastern Indonesia, while APII focuses on airports in the west of the country.

Now there is talk of merging them, essentially to improve operational efficiency. In the past the government has considered an IPO on each of them as well as a variety of public-private deals and foreign investments, with the air transport industry as a whole recovering.

But while the government is pondering that, this might be the time to give serious consideration to a scheduled set of auction tranches to attract concessionaires.

  • The Indonesian government is considering merging the state-owned airport operators Angkasa Pura I (API) and Angkasa Pura II (APII) for operational efficiency.
  • API manages 15 airports in central and eastern Indonesia, while APII manages 20 airports in the west of the country, including Jakarta's Soekarno-Hatta International Airport.
  • The integration of API and APII could potentially improve the effectiveness of hub-and-spoke operations and collaboration between international and domestic traffic.
  • API operates major airports such as Bali Denpasar (Ngurah Rai), Surabaya, and Yogyakarta, while APII manages Jakarta's Soekarno-Hatta International Airport.
  • Both API and APII have been expanding their portfolios by adding airports and seeking public-private partnerships and foreign investments.
  • The possibility of privatizing the entire Indonesian airports system through concession arrangements is being considered as a potential solution for upgrading and attracting investment.


  • The Indonesian airport operators API and APII may be merged for operational reasons.
  • API has some of the larger airports but APII has control of Jakarta's Soekarno Hatta.
  • APII was formed specifically to manage the Jakarta airports and there is no reason why the two expanded organisations should not be one.
  • Both have been growing by adding airports in recent years, and there has been talk of IPOs for both, and even of foreign investment.
  • Rather than applying cosmetic measures, the government might consider if the time has come to privatise them by concession.

Integration of API and APII state airport operators is under consideration

Indonesia's Deputy Minister of State-Owned Enterprises Kartika Wirjoatmodjo says the government is considering options to integrate the functions of Angkasa Pura I (API) and Angkasa Pura II (APII). Angkasa Pura is Sanskrit for 'Sky City.'

Mr Wirjoatmodjo said: "We see API and APII operating east-west so far".

He added, "If we look at the concept of all hub and spokes we want to carry out integration, not necessarily a merger, so that the arrangements for air hub and spokes really run optimally". He also stated: "With later integration, in the form of a holding or merger, later this hub and spoke integration will be truly effective so that later we can collaborate between inbound or foreign traffic and domestic traffic".

That perhaps suggests channelling international traffic, at least through a small number of major hub airports - for example Jakarta, Bali and Surabaya, supported by a second and larger range of minor hubs - but it is a fairly vague comment open to different interpretations.

There are 35 airports managed in total

API manages 15 airports across Indonesia and APII manages 20. Both are wholly state-owned enterprises under the Indonesian Department of Transport.

Established in 1964, API is responsible for the operation and development of certain airports in central and eastern Indonesia.

Active airports for PT Angkasa Pura I

API is responsible for some of the largest airports, including Bali

API has responsibility for some of Indonesia's busiest airports, including at Bali Denpasar (Ngurah Rai) (2), Surabaya (3) and Yogyakarta (6).

The Ngurah Rai airport is the main gateway serving the tourist destination of Bali. The airport is located 13km south of Denpasar, the main city on the island of Bali.

Bali's economy is almost completely reliant upon tourism, with a wide range of airlines operating services to Denpasar - predominantly from Southeast Asia and Australasia, as well as limited connections to Europe and the Middle East.

A number of Indonesian airlines provide domestic services to and from Denpasar.

Bali is also connected primarily to a range of cities throughout Southeast Asia and Australasia that are its main tourist catchment area, also to the Middle East (Doha and Dubai airports) and to Istanbul, which affords connections from across Europe.

Passenger traffic grew healthily in each of the years between 2010 and 2019, before the onset of the COVID-19 pandemic.

Bali Denpasar Ngurah Rai Airport: annual traffic, passenger numbers/growth, 2010-2023

The Surabaya airport services the second largest metropolitan area in the country

The Surabaya airport is quite different in nature, serving what is first and foremost a trading city and the second largest metropolitan area in the country after Jakarta, and even the Islamic Financial Centre for Indonesia.

Juanda International Airport is the third largest in the country, behind Jakarta Soekarno-Hatta International Airport and Bali.

Juanda airport is served by all major Indonesian airlines, as well as by major East Asian airlines, which operate to destinations across Indonesia and Asia. The airport's connection with Jakarta is among the most frequently served routes in Asia.

The Surabaya airport grew in fits and starts over the same period as the Bali airport, with growth levels as high as 20% in 2012, but with a surprise reduction in the same order in 2019.

Surabaya Juanda Airport: annual traffic, passenger numbers/growth, 2012-2023

Jakarta Soekarno-Hatta International Airport falls under APII

PT Angkasa Pura II is the operator, inter alia, of the main Jakarta Soekarno-Hatta International Airport (JSHIA), and also the Halim Perdanakusuma airport in the same city.

APII focuses on airports in the west of the country.

Active airports for PT Angkasa Pura II

The main Jakarta airport (JSHIA) is far and away the busiest in APII's portfolio: the main gateway both to the capital city and to the country as a whole, and indeed it was the 27th busiest in the world in 2019.

Passenger growth there was in slow decline, twice being negative (in 2014 and 2015), and even declining by 16% in 2019.

Jakarta Soekarno-Hatta International Airport (JSHIA): annual traffic, passenger numbers/growth, 2012-2021

Currently the leading airlines by capacity at SHIA are Lion Air and Batik Air (22% and 18% respectively) followed by the state airline Garuda.

JSHIA has almost 55% of its capacity on low cost carriers, which is not an especially high figure for the region (compared with Singapore Changi 34.4%; Bangkok Suvarnabhumi 60.9%; and Kuala Lumpur 52.65%).

JSHIA is more consistently an unaligned airport, with over 72% of capacity within that category.

Both organisations have been adding airports in recent years

In Apr-2023 API received approval from Indonesia's Ministry of State-Owned Enterprises and Aviasi Wisata Indonesia (state-owned holding company for aviation and tourism-related enterprises) to operate Kediri Airport, which is expected to serve the local area and potentially as an alternative gateway to East Java, in addition to Surabaya Juanda Airport. The airport is being developed under an MoU with Gudang Garam with a budget of IDR9 trillion (USD575.2 million).

Before that, in Mar-2021, South Korea's Incheon International Airport Corporation (IIAC) announced a consortium with API and Wijaya Karya (construction company) and won a tender to expand, improve and operate Batam Hang Nadim Airport 25 years. It would undertake works to renovate terminal 1 and develop terminal 2 and the project would require an estimated investment of KRW600 billion (USD530.3 million).

Also over the years API has sought out potential public-private partnerships (PPPs) for Bali, Yogyakarta, Surabaya, Makassar, Balikpapan and Banjarmasin airports, with foreign investors entitled to a 49% stake under the PPP contracts - as well as being identified by the government as having the potential for an IPO!

APII hasn't been slacking when it comes to co-operation with external entities either.

In Nov-2021, for example, India's GMR Airports Limited won a bid to develop and operate Medan Kualanamu International Airport, working with APII on a 49:51 partnership basis to transform the airport into a western international hub for Indonesia.

The project scope includes the operation, development and expansion of the airport over a period of 25 years. The project marked the entry of GMR Airports into a "fast growing Indonesian Aviation sector - the largest in ASEAN and a high potential market".

Before that, in Nov-2019, APII signed an agreement with the Ministry of Transportation to take over the management of three airports - Tanjung Pandan Hanandjoeddin Airport, Bengkulu Fatmawati Soekarno Airport and Bandar Lampung Radin Inten II Airport - and to undertake infrastructure development and other projects at the airports.

A great deal of internal and external activity, but little sign of consistency in strategic thinking

APII has, like API, acquired airports, entered into agreements with external third parties for airport development, been considered for an IPO, and - in its own case - also discussed external investment into airports in other countries.

What seems to be lacking is consistency in strategic thinking, although to be fair, both organisations are in a difficult position: external investment regarded by the government as being necessary to ensure the upgrade of many of Indonesia's airports, including JSHIA, where USD1.8 billion is being invested in projects that include a new Terminal 4 and Cargo Village.

But at the same time, many of those providers of external finance are wary of doing business in certain Southeast Asian countries (Indonesia and Vietnam being on that list) for a variety of reasons.

It is readily understood how integration of API and APII would help to improve traffic flows within and to/from Indonesia. Indeed, there does not seem to be any rational reason why they operate independently of each other to start with.

But perhaps the time has come for a complete shake-up of the entire operation, with full-blown but staggered privatisation of the whole airports system, starting with the airports that are most likely to attract investors and prompting a trickle-down effect in later tranches.

The experience in Brazil, where Infraero acted as a sort of combined API/APII, has shown that it can be done, and lessons learned from when it did not go right there would be invaluable.

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