Indonesia flies high at Singapore Airshow

Indonesian buyers dominated this year's Singapore Airshow, underscoring the vast Southeast Asian archipelago's growing importance in the world aviation industry. An expanding middle class, strong economic growth, political stability and the need to link the resource-rich islands are fuelling a travel boom that could spawn even more local airlines, industry executives and analysts say. Budget carrier Lion Air grabbed the limelight at the beginning of the trade fair on Tuesday when it formally sealed a $22.4 billion deal for 230 aircraft with US aircraft maker Boeing. Lion Air ordered 201 Boeing 737 MAX and 29 next-generation 737-900ERs, with purchase rights for an additional 150 planes for its domestic and regional operations. Dinesh Keskar, vice president of Asia Pacific and India for sales at Boeing Commercial Airplanes, described the deal as "the largest order in the history of aviation that I can know of". With some 240 million people, Indonesia has the world's fourth largest population and is the most far-flung archipelago with over 17,000 islands scattered across 33 provinces and three time zones between Singapore and Australia. Indonesia's economy grew 6.5 percent last year, the fastest pace in 15 years, with growth projected at between 6.3 and 6.7 percent this year. Foreign investors ploughed $20 billion into the economy in 2011, up from $17 billion on the year before. "Indonesia alone is able to sustain the robustness of the (Southeast Asian) market because the middle class is growing, it has a growing population and the country is also gaining confidence on the economic and political fronts," said aviation analyst Shukor Yusof of Standard & Poor's Equity Research. "The country is creating the market forces that allow more and more people to fly. Geographically it's perfect for the industry." Airlines are targeting Indonesia's eastern part such as Makassar, Sulawesi and Manado, all areas with a promising tourism sector, said Shukor, who expects smaller family-owned airlines to join the competition. "And don't forget that these are all the areas where you have all the mines and all the resource-based industries," he added. "People have got the money to travel." The market is so massive that there is still room for growth even with the current number of airlines plying the country, according to an executive at Indonesian flag carrier Garuda, which is facing stiff competition from private firms. "There is enough to be shared by everybody. Even if new airlines come in, we can all still make profit," said the source, who asked not to be named. At the Singapore Airshow, which is held every other year and closes this weekend, Garuda also signed a deal to buy six Bombardier CRJ1000 jets with an option for 18 more. The six firm orders are worth $297 million, Canada-based Bombardier said, adding that if Garuda exercises the 18 options, this will raise the deal to about $1.32 billion. And just two days after firming up its Boeing order, Lion Air announced it was buying 27 smaller aircraft from European manufacturer ATR. The new ATR 72-600 turboprop planes, worth $610 million, will be integrated into Lion Air unit Wings Air, with full delivery scheduled for the end of 2015. "The ATR aircraft are perfectly adapted to the Indonesian short-haul market and allows Wings Air to connect communities, even those located in remote areas," said Rusdi Kirana, chairman of Wings Air and president of Lion Air. Even on the military side, Indonesia was also a star at the show. The country signed a $325 million contract with Airbus Military for nine C-295 transport planes to be used by the air force for defence, logistical and humanitarian purposes.