Airport development: 17 investors interested in funding Hang Nadim

This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.

Bisnis Indonesia: Pengembangan Bandara: 17 Investor Tertarik Danai Hang Nadim

11 April 2018

By Rivki Maulana

Batam — Batam Free Trade Zone and Free Port Management Agency (BP) reported that there are 17 investors interested in taking on Terminal 2 project at Hang Nadim Airport in Batam. The new terminal will raise the passenger capacity to 10 million passengers per year.

Head of BP Batam, Lukita Dinarsyah Tuwo, said his agency has conducted a market sounding for the project to a number of potential investors.

Later, the chosen investor will make an investment to build the new terminal. In return, the investor will be granted a concession right within a certain period of time.

He mentioned the scheme for the project is similar in principle to the build, operate, and transfer (BOT) scheme. As for the concession duration, the matter is still under BP Batam’s consideration.

“The model will be akin to LCS (Limited Concession Scheme), but there is no legal umbrella for LCS yet. If it (regulation on LCS) had been issued, we could use it (LCS),” he told Bisnis in Batam, Tuesday (10/4).

Lukita stated the official tender to select an investor for Terminal 2 Hang Nadim Airport construction will be held in August – September 2018.

Further, BP Batam plans to ink a concession contract with the tender awardee in early 2019, so the investor can soon start the construction.

According to him, the investment cost for the new terminal construction at Hang Nadim Airport is estimated to reach Rp2.7 trillion to Rp3 trillion.

He emphasized that the need for a new terminal at Hang Nadim Airport is rather urgent as passenger traffic has now reached 6 million per year, or double the current airport capacity of only 3 million per year.

The plan is to have the new terminal serve only domestic flights, whereas the existing terminal will serve international flights.

Besides passenger terminal, BP Batam will also build a cargo terminal at Hang Nadim Airport to boost its logistics business. The cargo terminal is seen to play a critical role in realizing Batam vision as logistics centre.

Lukita mentioned that Batam has now become one of the most favourite areas for aircraft maintenance, repair, and overhaul (MRO) industry. In the long term, covering an area of 1,800 hectares, Hang Nadim airport is planned to be developed into an Aeropolis. “There is still plenty of land as only a quarter of it is currently used,” he said.

Bisnis noted that Lion Air’s subsidiary through Batam Aero Technic (BAT) has invested in Hang Nadim by building MRO facilities.

BAT plans to expand the existing hangar to 28 hectares on land owned by BP Batam.

With the expansion, BAT will be able to accommodate as many as 250 aircrafts. The expansion in MRO business is also in line with the expansion of Rusdi Kirana’s airline group, which brings in 650 aircraft units type ATR, Boeing, or Airbus to serve in domestic and international routes.

 

Airport Status

From Jakarta, Arista Indonesia Aviation Centre (AIAC) CEO Arista Atmadjati said an investor awarded the Terminal 2 Hang Nadim Airport project can garner maximum profits if the airport functions as hub and spoke.

According to him, the airport will not rake in enough revenue if it just hinges on local tariffs and outbound. What is more is that Batam citizens are not that large in number.

“Investor will make profit if Batam Airport plays a role as hub and spoke. Moreover, we have entered the ASEAN Open Sky era since 2015,” said Arista.

He explained that Batam can be a hub for overseas planes such as Bangkok, Chiang Mai, Hong Kong, and Manila. Also, passengers of international routes can be directed to large cities in Indonesia, such as Medan, Jakarta, Bandung, Surabaya, and Denpasar.

He reckoned that a trial would be necessary since, though potential, this is the first time a hub and spoke pattern is implemented. Arista does not mind investors having a concession right, so long as they only manage operation.

 

Batam Hang Nadim Airport Profile

IATA Code

: BTH

Location

: Batam, Riau Islands

Runway

: 4,025 m x 45 m

Capacity

: Boeing 747

Passenger Capacity

: 5 million/year

Function

: Alternative airport for Singapore Changi Airport

Source: Batam Management Agency, processed

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