aviation

Fly Jaya Enters Domestic Routes, Is Domestic Flight Business Still Promising?

New airline Fly Jaya officially started its operations last weekend, with the inaugural Jakarta-Yogyakarta route using an ATR 72-500 aircraft. 

Although the domestic flight market is still stagnant, aviation observer Alvin Lie considers the presence of Fly Jaya as a long-term strategic step to work on the mid-cost flight market niche served by large propeller aircraft. 

Alvin noted that the number of domestic flight passengers in 2024 did not experience significant growth. Based on data from the Directorate General of Air Transportation, the number of domestic passengers was recorded at 65,795,924 people, slightly down from 65,950,181 people in 2023. 

The highest record occurred in 2018, namely 101,961,268 passengers, before dropping drastically due to the operation of the Trans Java Toll Road and the impact of the Covid-19 pandemic. 

"So if asked whether there is growth? No. It is stagnant. But airlines like Fly Jaya do not look at short-term conditions, but rather long-term potential," Alvin told Kontan, Monday (7/7). 

Fly Jaya started its business with the ATR 72-500 propeller aircraft, which Alvin considered to have its own market niche. Currently, only a few airlines operate large propeller fleets, namely Wings Air and a small part by Citilink. Wings Air operates around 70 ATR aircraft, although only around 30 units are active. Meanwhile, Citilink only operates around three units. 

"This means that there is still a large space that can be filled by new players. This niche is almost without competitors," said Alvin. 

In addition to the potential for short inter-island routes that are efficiently served by propellers, Alvin also mentioned the upper limit tariff (TBA) which is beneficial for airlines with this type of aircraft. Based on KM 106/2019, the TBA tariff for large propeller aircraft is much higher than jets. 

"For example, Citilink sells Jakarta-YIA (Yogyakarta International Airport) tickets with Airbus for IDR 900,000. But the route to Adisutjipto Airport with ATR can cost IDR 1.6 million," he explained. 

However, Alvin reminded that current domestic ticket prices are no longer relevant to economic conditions and operational costs. The upper limit rate was last revised in 2019 with the assumption that the price of aviation fuel was IDR 9,500 and the exchange rate was IDR 12,500 per US dollar. Now, aviation fuel has reached IDR 12,000-13,000 and the exchange rate is above IDR 16,000 per US dollar. 

"All aircraft costs have increased significantly, from rent, spare parts, to insurance. But TBA has not increased. This is why airlines are more interested in opening international routes than domestic routes," he said. 

He gave examples of a number of new airlines such as Pelita Air and Transnusa which are now aggressively working on international markets such as Singapore, Malaysia, and Australia. 

Tag: Aviation Domestic Flight Fly Jaya