The Sky in Blues: On the Recent Development of Indonesian Airlines Industry

  • Abstract As the ASEAN put forward aviation industry liberalization measures in 2010, the Indonesian aviation industry has been moving towards the other side of spectrum of late. Two market ventures driving the change was in late 2018, where one of the leading airlines group, Garuda Group, through Citilink agreed to form cooperation with Sriwijaya Air. Second, January 2019 further marked the period in which Lion Air started charging ‘baggage fees’ and Garuda Indonesia stopped offering sub class ticket. Amid the presence of such changes in the industry, this study aims to discuss the current state, challenges, and potential of the Indonesian aviation market; comprehensively discuss the economic implications of such state of the industry; as well as how the government may act to help address the possible market failures. The study utilizes multiple data sources, i.e., data from CAPA, INFARE, as well as official governmental transportation database. We first describe the potential of airlines industry in Indonesia. We identify the periodical breaks in the industry’s growth; that is, during which periods significant changes are happening. What follows is a complete breakdown of the market concentration and landscape. We proceed to show the impacts of the generalized price hike. Our findings suggest that loss of passengers is immense. Further, we find an intriguingly similar capacity drop in the period following the Citilink – Sriwijaya deal conducted by virtually all the members of Garuda Group and Lion Air Group – all against the year-on-year trend. We specifically decompose the changes that follow…
    04 Dec
    04 Dec
  • Abstract The 2018 Asian Games is the biggest sports event in the history of Asian Games in terms of contested sports as well as the participating athletes. Considering the massive scale of the event, it is imperative that the benefits generated by the 2018 Asian Games be measured. This study contributes to the extant body of literature on the long-term benefits of sports event on tourism and sports tourism sectors, with reference to the case of 2018 Asian Games in Indonesia. Using primary data collected through the survey during the event, the study found that hosting the 2018 Asian Games has increased favorable perceptions among event participants and visitors towards Indonesia; positively affected the propensity to repeat visitations to Indonesia in the future; increased the likelihood of giving positive referrals to Indonesia for tourism destination and future international sports event hosting. The academic and policy implications of the findings are discussed.…
    25 Nov
    25 Nov
  • Abstract During 2013–2016, there are policy changes on Personal Income Tax (PIT) exemption, stated in PMK No. 162/PMK.011/2012, PMK No. 122/PMK.010/2015, and PMK No. 101/PMK.010/2016. Nonetheless, there is no empirical study yet, to my knowledge, that evaluates this policy. An increase of PIT exemptions can be viewed from distributive aspect, of how the incidence (benefit) distributed across taxpayers’ disposable income, as well as on the efficiency aspect, whether it has or has not affected labor supply. This study explored on the efficiency aspect. The agents – taxpayers as workers – now may experience an increase in net income due to a more generous exemption, and whether the policy of PIT exemption may influence taxpayers’ labor supply is more of an empirical question. I use SAKERNAS data from 2010–2018 and estimation model is limited to only consider paid (labor) employment rather than self-employment. On paid (labor) employment, firms function as withholding that can extract some of PIT from employee’s salary, and thus paid (labor) employee may then file PIT return. My preliminary result shows that effect of PIT exemption policy change is heterogenous across group of population. PIT exemption expansion increases labor supply of paid (labor) employees of the previously lowest income bracket of PIT. However, although to an extent tax saving may be higher for middle to high income individuals, taxpayers referring to individuals in income bracket of 15% rate tend to be not affected by the policy of PIT exemption.…
    21 Oct
    21 Oct
  • Abstract This paper empirically examines asymmetric transmissions from money market rates to various consumer rates throughout a sample period that comprises monetary policy shifting in Indonesia from 2011 to 2017. We adopt modification of Asymmetric Error Correction Models (AECM), which incorporate three-error correction term. This allows us to inspect the different adjustment when the disequilibria are: large-positive, large-negative, and small. Our findings shows that there are varying asymmetric adjustment in response to different shocks across products in lending market. Thus, the monetary authorities should notice that both easing and tightening monetary policy appear to have varying impact to different credit market.…
    03 Oct
    03 Oct
  • Abstract The 2018 Asian Games was the biggest sports event in the history of Asian Games. Held in Indonesia, the sports event contested 40 sports and 465 events while served for 11,326 athletes from 45 Asian countries, apart from hundreds of thousands of international visitors, officials and journalists. While required a considerable amount of public spending, such a massive scale of event generated large economic stimuli to Indonesian economy, among which were the spending of international participants and spectators. This study aims to estimate the determinants of international participants and spectators’ spending. Data were collected through face-to-face interviews during the event. The findings suggest that the spending and spending composition of international participants and spectators vary across types of participants, country of origins, gender, age group and traveling experiences. The academic and policy implications of the findings are discussed.…
    29 Jul
    29 Jul
  • Abstract This study aims to delve deeper into the discussion on how the financial inclusion progress in Indonesia could be affected by the growing fintech industry. We shall comprehensively discuss the current state of the platforms in the country, including the potential benefits and challenges. Such afflictions include the hugely-concentrated deposit market, to begin with and the discrepancies between regulators and the technological changes, while the high internet and mobile phone penetration are only one of the many advantages the country are endowed with. The study aims to highlight the challenges faced in increasing financial inclusion before the fintech platforms begin to flourish and how they differ to the current condition. Novel and relevant policy recommendations are also provided in the latter parts of the discussion.…
    02 Jun
    02 Jun
  • Abstract Indonesia decentralization policy is an expenditure type of decentralization. It has evolved from setting functional assignments to coordination of expenditure programs across level of governments. This study will compare type of cooperation that has taken place in three sectors of expenditure programs: (1) environmental – carbon emission mitigation programs, (2) infrastructure programs, and (3) social assistance program. We investigate challenges and opportunities of central government support that can still be salience for the sub-national and local governments involvement on those expenditure programs.…
    23 May
    23 May
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