Investor Daily, Jakarta – The government is looking for options to integrate the function of two state-owned airport operators Angkasa Pura I (AP I) and Angkasa Pura II (AP II) for better air route management.

AP I at present manages 15 airports in central and eastern Indonesia, while AP II is in charge of 20 airports which mostly lie in the western region.

Deputy State-Owned Enterprise (SOE) Minister Kartika "Tiko" Wirjoatmodjo said the government had yet to decide if they should do a merger or establish a holding to integrate the two airport operators.

AP I and AP II have adopted the hub-and-spoke model. In a hub-and-spoke system, a major airport serves as a central point for coordinating flights to and from other airports, according to Merriam-Webster.

"We would like to integrate [AP I and AP II], but not necessarily a merger, but [we are hoping this] so the hub-and-spoke management can run optimally," Tiko said in Magelang on Monday.

Indonesian airports have two superhubs, namely Jakarta and Bali. There are also other hubs such as Surabaya, Makassar, and Medan. Tiko said that he, however, found these routes failed to be managed in a comprehensive manner.

"Be it a holding or a merger, this would pave the way for an effective hub-and-spoke integration. This will allow us to work together on integrating the inbound or overseas traffic and the domestic traffic. In the past, it felt as if there was a disconnection between the west and east as if there were two separate managements," Tiko said, as quoted by Antara.

Early this year, SOE Minister Erick Thohir said that the government would consolidate or merge more SOEs with similar business models. This plan is part of the 2024-2034 SOE roadmap.

Aviation industry expert Gerry Soejatman disapproves of the AP I-AP II merger as the two airport operators have their own strengths and weaknesses.

"Since they are split into AP I and II, they have grown according to the characteristics of their regions. This develops the differences in their corporate culture and how they see the opportunity in the region they serve," Gerry told Investor Daily on Monday.

The merger can also hamper the aviation industry's recovery. Gerry suggested that it would be better if AP I and AP II-managed airports could be put in strategic partnerships or public-private partnerships, and have the airport holding afterward. This will allow each airport to freely implement policies that are competitive and suitable for the regions they serve.

"Because every airport is an 'ambassador' and the gateway to the region they are in," Gerry said.

Source: https://jakartaglobe.id/business/indonesia-seeks-to-integrate-management-between-airport-operator