Between Economic Realities and Threats to Sovereignty
Indonesia’s aviation sector has undergone a rather ironic evolution over the past 25 years. As the world’s largest archipelagic nation, air transportation should have been a top priority in connecting its vast and scattered territories. However, the beginning of 2025 marked the end of an era for state-owned airlines in Indonesia. Merpati Nusantara Airlines, Pelita Air Service, and finally, Garuda Indonesia have all gone bankrupt. This situation reflects fundamental issues that go beyond mere economics. It is a brilliant yet tragic outcome of the deep-rooted culture of corruption and the negligence of the elite and society at large toward the national aviation system. The truth behind this collapse may never be fully revealed unless a comprehensive investigation is conducted to uncover why state-owned airlines have systematically collapsed one by one over the past 25 years. A truly heartbreaking reality.
The Failure of State-Owned Airlines Management. The sustainability of state-owned airlines is influenced by various factors, including poor management, excessive debt burdens, and inappropriate political interventions. Garuda Indonesia, for instance, has struggled for years to break free from debt traps and inefficient business practices. Government financial rescues, such as debt restructuring and capital injections, have proven to be mere temporary solutions. Ultimately, Garuda’s inability to compete with private airlines, which are more flexible and aggressive in their business strategies, has left the nation’s pride battered and defeated without mercy. When the management of Garuda Indonesia was eventually taken over by executives from the Lion Air Group, many questioned the future of public service orientation in Indonesia’s aviation industry. Likewise, Garuda’s world-class safety culture is expected to change drastically. State-owned airlines like Merpati Nusantara Airlines, for example, were supposed to serve the public, including remote areas that were not commercially viable. However, when all airlines are operated solely for profit, previously subsidized routes serving as national unifying networks may be abandoned due to their lack of profitability. Thus, the aviation network that once held Indonesia together will vanish entirely.
Economic Impact: Dependence on Foreign Entities. The emergence of Indonesia Airlines, announced in early March 2025, initially seemed to offer a glimmer of hope for the national aviation sector. However, the harsh truth soon became apparent: this airline is, in fact, a state-owned enterprise of Singapore. Despite bearing the name “Indonesia Airlines,” it is essentially an extension of a foreign country’s efforts to dominate Indonesia’s aviation sector—an undeniable reality that Indonesia has always been an incredibly lucrative market for business.From an economic perspective, this signifies Indonesia’s growing loss of control over its strategic industries. Aviation is not merely a transportation business; it plays a crucial role in national economic development. With the decline of national airlines and the rise of foreign-controlled carriers, the financial circulation that should benefit the domestic economy is instead flowing abroad. Dependence on foreign airlines also hinders the development of Indonesia’s aviation industry. A strong national airline should serve as a catalyst for the local aerospace industry, aircraft maintenance, repair, and overhaul (MRO), as well as aviation workforce training. However, with foreign dominance, these opportunities shrink, and Indonesia risks becoming nothing more than a cash cow, ripe for relentless exploitation.
A Threat to Airspace Sovereignty. Beyond economic concerns, this situation poses a significant threat to Indonesia’s sovereignty. In terms of national defense, control over airspace is a critical aspect. Without a state-owned airline, monitoring and managing air traffic will become increasingly challenging. Moreover, foreign-owned airlines operating in Indonesia may gain access to strategic data concerning all aviation activities in the region.National security could be compromised if foreign entities have greater control over Indonesia’s air traffic. Countries with vested interests in Indonesia could use their airlines for intelligence gathering or data collection. Additionally, in times of crisis or conflict, dependence on foreign airlines could hinder rapid mobilization of defense resources, particularly in addressing national security threats or natural disasters, which frequently occur in Indonesia.Furthermore, the loss of state-owned airlines deprives Indonesia of a crucial strategic instrument for national missions, such as logistics transportation in disaster situations, military operations, or diplomatic engagements. A national airline should be a key asset in responding to emergency situations at any given moment.
Solutions and Hopes for the Future. To address this reality, concrete steps must be taken to rebuild a stronger and more sustainable national aviation industry. The government must have a long-term vision in developing an aviation ecosystem that is not only economically viable but also supports national self-sufficiency and sovereignty. Some potential solutions include:
- Revitalizing a National Airline – If feasible, the government should consider re-establishing a national airline with a healthier and more efficient business model, learning from past failures. In this regard, profitable domestic routes, along with Umrah and Hajj flights, could serve as a starting point for recovery.
- Supporting Domestic Aviation Industry – Indonesia must develop its domestic aviation sector, including aircraft manufacturing and MRO services, to reduce dependence on foreign entities.
- Implementing Strict Regulations on Foreign Airlines – The presence of foreign airlines should be strictly regulated to ensure they provide benefits to Indonesia and do not undermine national interests.
- Enhancing the Aviation Workforce – The development of skilled professionals in the aviation sector must be prioritized so that Indonesia does not merely become a labor market for foreign workers.
As a final note, it is crucial to emphasize that the airspace over Indonesia’s territory is a natural resource. Referring to the constitution, natural resources must be controlled by the state and utilized for the maximum benefit of the people.
Jakarta, March 9, 2025
Chappy Hakim – Founder & Chairman Indonesia Center for Air Power Studies
