Indonesia’s $ 6 billion airport bid has pitted Singapore’s Aviation against Aviation

Medan, Indonesia – A $ 6 billion proposal to turn an Indonesian airport into a regional hub against Singapore and Kuala Lumpur has raised concerns among local tour operators questioning the transparency and viability of the project.

An Indonesian state-owned airport operator and a consortium led by India are proposing to make North Sumatra North Kualanamu International Airport one of the busiest airports in the region with 50 million passengers a year.

According to a plan announced by the Angkasa Pura II and GMR Airports Consortium earlier this month, the number of passengers at the airport would increase fivefold compared to previous pandemic levels, against Kuala Lumpur International Airport and Changxi.

The GMR Airports Consortium, made up of the GMR Group in India and the French Aeroports de Paris, has promised an initial investment of IDR 56 trillion ($ 3.9 billion) under an initial 25-year contract to develop the airport. the rest will come from Indonesia.

The sudden announcement of the deal, however, has sparked controversy in the North Sumatra tourism industry, with some actors questioning why they were not consulted and saying the airport was “sold to India”.

“I think it’s okay to hand over foreign management, but it needs to be clear what’s going on,” said Al Jazeera Mercy Panggabean, CEO of Medan-based PT Wesly Tour & Travel. “Why weren’t the tour operators invited to discuss this when they bid? There was no news of this until we learned through the media that the GMR Airports Consortium had won. ”

Panggabean said while local operators were not opposed to the deal, it should be more transparent about the details of the Angkasa Pura II project in the state.

“Does that mean there will be direct flights to Kualanamura? What’s the point here? ”He said.

Clement Gultom, managing director of Medan at Boraspati Tour and Travel, told Al Jazeera that he was also impressed with the announcement, even though he “did not see any Indonesian companies” by the GMR Airports Consortium regarding the development of the airport.

GMR Group operates Delhi Indira Gandhi International Airport and Hyderabad International Airport with contracts for the development of airports in India and Greece and the Philippines. Aeroports de Paris owns and operates Paris-Charles de Gaulle, Paris-Orly and Paris-Le Bourget.

Despite concerns over the local tourism industry, Djamanat Samosir, an investment law expert in Indonesia, told Al Jazeera that there was little to the agreement that seemed alarming.

“The fact that it went through a bidding process shows that this was fair and transparent,” Samosir said. “It simply came to our notice then. If they do not comply with the contract or there is a discussion about what has been agreed, then we can say that this agreement was strange. “

However, Samosir said it is impossible to know the exact details of the project without seeing the actual contract.

“That’s the most important thing we have to find,” he said.

Angkasa Pura II and the GMR Airports Consortium did not respond to Al Jazeera’s comments.

Earlier this month, Kartika Wirjoatmodjo, the deputy minister of state-owned enterprises, told parliament that Kualanam International Airport would be “scaled to become a global airport” because of its “very strategic location”.

Srinivas Bommidala, president of the GMR Group’s energy and international airports, said the company plans to “turn the airport into an international hub”.

‘Bad investment’

The airport currently serves as a provincial hub for travelers traveling to other parts of Sumatra, such as Aceh or Batam. Prior to 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 the collapse of international travel during the pandemic.

“Not only is there a problem with entering a country, but it’s also difficult to return to your home country now,” he said. “There are a number of obstacles that stand in your way. Travel will never go back to where it used to be. ”

He said the target of 50 million passengers was unrealistic, and questioned why the GMR Airports Consortium would accept the deal.

“Will it be profitable for them? That’s weird for me, ”he said, believing the consortium would have difficulty recovering its investment.

“I think it’s a bad investment,” he added. “How can they make money?”