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Domestic Air Growth Expected to Slow Down in 2008

Higher Fuel Costs and Reduced Spending Power will Slow Down Indonesia's Rapidly Expanding Domestic Air Sector.

(1/4/2008) The Indonesian National Air Carriers Association (INACA) anticipates that domestic air travel will increase only 6% in 2008 in response to higher fuel prices, increased domestic air fares and generally reduced consumer spending power.

While positive passenger growth in the vicinity of 6% is respectable, it still represents a slow down from the current year where domestic air travel expanded an estimated 15%.

Sounding a pessimistic message, the Secretary General of INACA, Tengku Burhanuddin, said that current fuel surcharges of Rp. 100,000 ($10.52) per flight fails to cover the entire substantial additional burden of higher fuel costs which are contributing to the operating losses being experienced by some Indonesian air operators.

A more optimistic view of the future of domestic aviation has been offered by a Director of the Department of Civil Aviation, Tri S. Sunoko, who thinks domestic air passenger traffic will increase by 14% in 2008.

According to Tri, "my predictions are not a drastic as INACA's forecast of only 6% growth."

Tri defended his more buoyant view which he said is based on growth of the general economy, consumer spending power and anticipated future fuel costs.

In the long term, insisted Tri, Indonesian domestic aviation will continue to demonstrate strong growth.