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Indonesia: New Semi-Private Company to Run Air Traffic Services

(Oct. 12, 2012) Indonesia has adopted a new regulation that establishes a semi-private corporation to run the air traffic services in the country. Under Government Regulation No. 77/2012 on Indonesian Flight Navigation Service Organizer Bodies, which was signed by President Susilo Bambang Yudhoyono on September 13,2012, the state-owned airport management authorities will no longer run the air traffic controllers. The purpose of this change is to separate air traffic navigation organizers from those controlling the airports themselves, in order to make navigation control more efficient and improve safety. The Regulation was created in accordance with the 2009 Aviation Law. (Bagus BT Saragih, SBY Signs Regulation on Air Traffic Corporation, THE JAKARTA POST (Sept. 9, 2012); Undang-undang Republik Indonesia Nomor 1, Tahun 2009, Tentang Penerbangan [Republic of Indonesia Law No. 1,  2009, Concerning Aviation], Directorate of Public-Private Partnerships website.)

When first established, the new company will be operated by officials from Angkasa Pura I and Angkasa Pura II, two existing state-owned firms, together with personnel from the Ministry of Transportation. These firms and the Ministry of Transportation currently operate about 200 airports throughout Indonesia. The new entity will provide air traffic services; aeronautical telecommunication, information, and meteorological services; and information services to be used for search and rescue missions. (Saragih, supra.)

The new company will take over air traffic control gradually, with some areas, including Jakarta, making the transition within a year and the others within the following year. The company will be located in Jakarta, but may establish branches elsewhere in Indonesia. Funding for the company initially will come from the Ministry of Transportation, which is to transfer assets to it worth about US$10.42 million. (Id.) It will take the form of a public company (Perusahaan Umum), which is a government-owned company established for a specialized task. (Bagus BT Saragih, New Firms Will Manage Air Traffic, THE JAKARTA POST (Oct. 10, 2012).)

International concern about the safety of air travel in Indonesia, where demand for the service is growing, may have been part of the motivation for the reform of the current aviation control structure. Attention has been focused in part on the air traffic control system, which has been described as so inadequate that local music broadcasts can interfere with aviation communications. (Clive Dorman, Indonesian Airlines Booming, but Are They Safe?, THE SYDNEY MORNING HERALD (Aug. 6, 2012).) One news report cited the difficulty Indonesia has had in hiring enough well-trained pilots as part of the problem. (Concerns over Indonesia Air Safety, AL JAZEERA (Aug. 22, 2012).)

The U.S. Federal Aviation Administration (FAA) gives Indonesia a rating of 2 in its International Aviation Safety Assessment Program. (FAA Flight Standards Service, FAA website (Jan. 6, 2012).) That rating indicates that the United States considers that Indonesia does not provide adequate safety oversight “in accordance with minimum safety oversight standards established by the International Civil Aviation Organization … .” (IASA Results Definitions, FAA website (last visited Oct. 10, 2012).)