North Bali airport: part two – finding the right business model and route network strategy


In what is possibly, finally, becoming a 'post-COVID world', governments and private sector airport operators alike have some hard decisions to make about airport infrastructure that have been put aside for close to three years.

One of those places is the Indonesian island of Bali - one of the most popular tourist spots in Southeast Asia, where the existing airport was crowded and constrained before the pandemic.

The arguments for and against going ahead cancel each other out, and this latest hiatus might be used as an opportunity not only to select a precise location, but also to identify what it's raison d'être is, beyond merely "relieving congestion" at the existing airport.

Much has changed in the past three years. Understanding - as far as possible - of where the industry is going is of paramount importance in any cost-benefit calculation about greenfield infrastructure.

This is part two of a two-part report.

  • The development of the new North Bali International Airport in Indonesia remains a national need, despite being taken off the country's Strategic Projects list.
  • Tourism to Bali and Indonesia is slowly recovering, with a 7% growth in the first half of 2022.
  • The authorities should not rely solely on the Australian tourism market, as Australia is facing economic problems and slower growth.
  • Ngurah Rai Airport in Bali experienced a significant reduction in passenger traffic due to COVID-19 but has shown a recovery of 166% in the first half of 2022.
  • A small number of non-Indonesian airlines generate the majority of international capacity at Ngurah Rai Airport, with a focus on Southeast Asia and Australia.
  • The new airport in Bali faces a dilemma in deciding whether to target low-cost carriers or full-service airlines, as both have contributed to the growth of traffic in the past decade.


  • New Bali airport "remains a national need", but is taken off Indonesia's Strategic Projects list.
  • Tourism to Bali and Indonesia in general is growing again, but not rapidly yet.
  • The authorities should not rely on any resurgence in the Australian tourism market, but alternatives are not easily identified.
  • The correlation of full service and low cost growth will be a critical calculation for the new airport when a spade is finally turned.

New Bali airport "remains a national need" but is taken off Indonesia's 'Strategic Projects' list

In part one of this report CAPA highlighted that Indonesia's Deputy Minister for Regional Development and Spatial Planning had confirmed that the development of North Bali International Airport "remains a national need", despite the project's removal from the National Strategic Projects list in Jul-2022.

However, the project will not be completed in 2024 as previously planned.

The North Bali International Airport (Bali Buleleng Airport) (hereafter NBIA) is a proposed new airport development project that is intended to provide the Indonesian island of Bali with a second commercial airport and to ease the growing congestion at the current Denpasar Airport, Ngurah Rai.

Tourism to Indonesia growing again slowly in 1H2022

The existing Ngurah Rai airport and both of the potential sites for the new airport (highlighted in part one) are quite close together on what is quite a small island.

Tourism to Indonesia in general is picking up again, albeit slowly (+7% in 1H2022), and there are still stringent regulations in place.

At the end of Aug-2022 the operator Angkasa Pura II reported that travellers were now required to have received a third or booster vaccine dose or they would not be permitted to travel domestically by air.

To be introducing such measures now (there is no spike in cases, which are running at around 4,000 a day in the country) seems ridiculously draconian.

Indonesia annual tourism: visitor arrivals/growth, 2008-2022

Nevertheless, tourists are expected to return to Bali fairly quickly now, and there was consistent growth in the 12 years 2008 to 2019, reaching +22% in 2017, so if another airport is to be built it should really be on the National Strategic Projects List.

Solid passenger traffic growth over the past decade

Looking at Ngurah Rai, during the 10-year period 2010-2019 passenger traffic development growth averaged +9.5%, with only one negative year (2015), although in common with so many other airports across the globe growth it was negligible (+0.5%) in 2019 - almost as if the world knew that COVID-19 was coming.

That growth made Ngurah Rai the second busiest airport in Indonesia in 2019 after Jakarta Soekarno-Hatta, a position it had occupied for the previous three years.

Bali Denpasar Ngurah Rai Airport: annual traffic, passenger numbers/growth, 2009 -2022

Recovery from the impact of COVID-19 not as spectacular as at some peer airports in the region

Ngurah Rai experienced the same level of disruption as other airports in the region that are tourist-dependent, with a -75% passenger reduction in 2020 and a further -39% in 2021, but it recovered by +166% in the first half of 2022.

That is not as impressive a recovery though as, say, Phuket Airport in Thailand or Mactan-Cebu Airport in the Philippines - both airports being tourism-oriented and both of which were around +350% in advance of the 2021 position in 1H2022.

Moreover, capacity at Ngurah Rai is still well short of 2019's (-33%) as of the week commencing 05-Sep-2022, and domestic seats still outweigh international ones by a ratio of 60%:40%.

A small number of non-Indonesian airlines generate most of the international capacity, most of which is within Southeast Asia and Australia

Of the Top 10 airlines operating at Ngurah Rai as measured by seat capacity, all but three are Indonesian, and those local airlines account for two thirds of capacity but only 12% of international seats.

So a very small number of non-Indonesian international airlines are responsible for generating the vast majority of international capacity.

What's more, that international capacity is heavily focused on Southeast Asia and Southwest Pacific (including Australia), with smaller contributions from the Middle East, Northeast Asia and Eastern/Central Europe. There is no capacity directly to/from Western Europe or the Americas.

Bali Denpasar Ngurah Rai Airport: international departing seats by region, week commencing 05-Sep-2022

Australia is no longer the tourist panacea it once was, but other regions' economic problems preclude large-scale visitor enhancements

With so many of the foreign visitors to Bali being from Australia (before the pandemic and since the visa programme reopened this year - they were only 1.5% of the total in 2021), the tourist authorities might well presume that country will continue to supply those tourists.

But Australia faces economic problems like much of the rest of the world. Over the next two years the economy there will grow more slowly than it ever has in a non-recessionary period, while inflation is expected to peak at close to 8% by the end of 2022. That rate isn't as high as it is right now in the US, or the 9-10% in Europe and the UK (which is expected to increase further, along with utility prices spiralling to ridiculous levels).

These factors would seem to rule out most of those places as being sources of new or enhanced tourism for some time to come, and North Asia, especially China, is still adversely impacted by a lingering COVID-19 threat and a perennially nervous reaction to it.

Low cost or full service? Bali is on the horns of a dilemma as to which to cultivate

Finally, there are two contrasting factors to take into account with regard to the traffic that the new airport should target.

Two thirds (66%) of seats at Ngurah Rai just now are on low cost carriers, and 80% are on unaligned airlines (airlines that do not belong to an international alliance).

The priority might be to bring in more alliance members, if possible, because their operations almost always bring in a level of extra passengers that is a mathematical function of the number of member airlines and of where they fly. By contrast, an unaligned airline will usually bring in little more than the traffic that exists between two points - unless it is set up for fifth and sixth freedom operations to or via Bali.

But at the same time it might be argued that if it is low cost services that have generated the solid increase in traffic during the past decade, it is low cost that should be encouraged to build business at the new airport.

Settling on a business model and associated route network strategy for the new airport has thus taken on as great a significance as finding the right location for it.

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