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Garuda Indonesia aircraft Lion Air aircraft up-close

ASEAN Open Skies Impact assessment

Mott MacDonald was appointed to quantify the cost and benefits of implementing the ASEAN Open Skies policy in Indonesia. This multi-lateral framework will liberalise and invigorate the regional market for aviation, directly impacting 10 countries in ASEAN and indirectly impacting the whole market in Asia Pacific.

Open Skies will account for around 2.9 trillion Rupiah ($2.7bn) in additional direct GDP and 16,000 in direct jobs by 2025. Including indirect and induced effects this rises to 6.3 trillion Rupiah ($5.7bn) and 29,000 jobs by 2025.

Merpati Nusantara airplane at Soekarno-Hatta International Airport
Merpati Nusantara Airlines
Merpati Nusantara Airlines With flight operations to 84 destinations including 25 in Indonesia, Merpati Nusantara Airlines providing vital economic and social connectivity for remote communities.

Client: Indonesia Infrastructure Initiative (IndII), funded by the Australian government, through AusAID.

The information we provided was a vital component in informing the Indonesian government of the implications of introducing an Open Skies policy, of how it would affect the national air transport industry, and also of how it should be implemented to maximise social and economic benefits while ensuring competitiveness with other ASEAN nations.


There were a number of challenges to overcome for the successful delivery of the project. These included:

  • Estimating the pace of growth in one of the world’s fastest growing aviation markets and the implications on the Indonesian air transport industry and associated infrastructure
  • Measuring the overarching importance of aviation in the socio-economic development of an emerging economy such as Indonesia
  • Assessing the external competitive threats to Indonesian airlines from liberalisation across the ASEAN region
  • Managing the legal complexity of implementing a multi-lateral agreement that will directly impact on 10 different countries within ASEAN, and have impacts across the rest of the Asia Pacific region


Mott MacDonald produced traffic forecasts at twelve of Indonesia’s main international airports to determine the current demand/capacity balance of passenger and air cargo demand compared with available capacity at the country’s main international airports.

We reviewed the competitive market position and operational readiness of the Indonesian airlines in an open skies scenario where they were for the first time exposed to unconstrained direct international competition.

We produced analysis to demonstrate the impacts on the national air travel industry as a consequence of ASEAN Open Skies, and benchmarking it against the experience of other liberalisation regimes in Europe and the United States. This highlighted the positive effects of aviation market liberalisation and estimated the direct and indirect economic benefits to the nation of such a policy.

Value and benefits

The results of the analysis were used to derive the overall strategy and roadmap for implementation of the Open Skies policy in the country.

  • We helped our client understand the importance of economic impact studies to evaluate the importance of the air transport industry in Indonesia and thereby improve their service to their stakeholders.
  • The study estimated that Open Skies will account for around 2.9 trillion Rupiah ($2.7BN) in additional direct GDP and an additional 16,000 direct jobs in 2025. If indirect and induced effects are included these differentials increase to around 6.3TN Rupiah ($5.7BN) and 29,000 jobs in 2025.
  • Our experts assisted IndII with its strategic aim of promoting economic growth by working with the Government of Indonesia to enhance infrastructure policy, planning and investment.
  • We provided the government with a road map to facilitate the implementation of the Open Skies policy, ensuring the best possible preparedness for the Indonesian air transport sector.
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