Plan to turn North Sumatra airport into hub servicing 50 million passengers prompts transparency, feasibility concerns.
A $6bn bid to shift an Indonesia airport into a regional hub rivaling Singapore and Kuala Lumpur has sparked concern among local tour operators who challenge the transparency and feasibility of the project.
Kualanamu International Airport
Indonesia’s state-owned airport operator and an Indian-led consortium suggest transforming Kualanamu International Airport in North Sumatra province into one of the region’s most active airports with 50 million passengers every year.
- Under the plan revealed earlier this month by Angkasa Pura II and GMR Airports Consortium, the airport would see passenger numbers rise five-fold compared with pre-pandemic levels to rival Kualanamu International Airport and Changi.
GMR Airports Consortium, which is made up of Indian-owned GMR Group and French Aeroports de Paris group, has committed an initial investment of IDR 56 trillion investment ($3.9bn) as part of a 25-year contract to create the airport, with the remainder to reach from the Indonesian side.
Tourism industry in North Sumatra
The sudden statement of the deal, however, has sparked debate within the tourism industry in North Sumatra, with some stakeholders requesting why they were not consulted and expressing concern the airport had been “sold to India”.
“I believe it is OK to hand it over to foreign management but it needs to be clear what is happening,” Mercy Panggabean, the general manager of Medan-based tour company PT Wesly Tour & Travel.
“Why were tour operators not requested to discuss this when they had the tender?
There was no news about any of this until we saw out through the media that GMR Airports Consortium had won.”Panggabean told that while local operators were not objected to the agreement itself, state-owned Angkasa Pura II must be more transparent about the details of the project.
“Does this mean that there will be non-stop flights to Kualanamu?
What is the target here?” she declared.
Clement Gultom, managing director of Boraspati Tour and Travel in Medan, was also surprised by the statement, although he had “not seen any Indonesian company with the same portfolio” as GMR Airports Consortium when it reached airport growth.
Delhi Indira Gandhi International Airport
GMR Group operates Delhi Indira Gandhi International Airport and Hyderabad International Airport in India and has contracts to develop airports in Greece and the Philippines. Aeroports de Paris owns and operates Paris-Charles de Gaulle, Paris-Orly and Paris-Le Bourget in France.
Despite the concerns within the local tourism industry, Djamanat Samosir, an expert in Indonesian investment law there was little about the agreement that appeared to be cause for alarm.
“The fact that they went through a tender process shows that this was fair and transparent,” Samosir told.
“They will have prepared a clear agreement between the other parties setting out expectations and there is nothing strange about any of that.
If they don’t stick to the contract or there is a subsequent dispute about what was approved, then we can tell that there was something odd about this agreement.”
However, Samosir told it was unbelievable to understand the specific details of the project without being able to see the current contract.“That is the most required thing that we must discover out,” he told. Angkasa Pura II and GMR Airports Consortium did not respond to repoter.
Earlier this month, Kartika Wirjoatmodjo, the deputy minister for state-owned enterprise, told parliament Kualanamu International Airport would be “scaled up to be a world-class airport” due to its “very strategic place”.
He told the target of 50 million passengers did not seem realistic, asking why GMR Airports Consortium would have approved the deal.
“Is it going to be profitable for them? That is what is fishy to me,” he told, speculating the consortium would struggle to recoup its investment.“In my opinion, it is a bad investment,” he added.
“How can they earn money?”
Bommidala, GMR Group chairman for energy and international airports, has told the company envisages “transforming the airport into an international hub”.
Flights to Singapore and Malaysia
The airport currently functions as a provincial hub for passengers traveling to other parts of Sumatra such as Aceh or Batam. Before the COVID-19 pandemic, the airport had limited flights to Singapore and Malaysia.
Gultom, managing director of Boraspati Tour and Travel, questioned the timing of the development given the collapse of international travel during the pandemic.
“There is not just a difficulty with entry to a country but arriving back to your country of origin is now also difficult,” he told. “There are so many barriers stopping you. Travel will never get back to where it was.”
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