INDONESIA’S SLUGGISH DOMESTIC MARKET
In 2025, Southeast Asia seat capacity was about 8 per cent below 2019 levels, based on OAG data. Indonesia’s domestic market accounts for more than half of the gap – approximately 31 million of the 54 million seat reduction.
Last year, Indonesia’s domestic market was 19 per cent below 2019 levels, based on airport passenger traffic data from BPS-Statistics Indonesia. Compared to 2018, Indonesia’s domestic market in 2025 was down by 34 per cent.
The peak year for air travel within Indonesia was 2018, when it became the fifth country to reach 100 million domestic passengers, joining the United States, China, India and Japan.
However, Indonesia’s domestic market contracted in 2019 to about 80 million, and so far in the post-pandemic era has fallen short of 70 million every year.
Indonesia’s domestic market has the fundamentals to get back on the growth curve. Its population of 288 million represents 41 per cent of the Southeast Asian total and has an archipelago geography stretching over 5,000km east to west.
However, both the demand and supply pictures are concerning.
On the demand side, Indonesia’s middle class and consumer spending have been shrinking in recent years. Consumer confidence further weakened in 2025 as unemployment rates surged, contributing to another decline in domestic airport passenger traffic of 3 per cent.
The economic outlook for 2026 is even worse. The Indonesian rupiah hit an all-time low against the US dollar in January, leading to market uncertainty and investor unease.
Indonesian airlines are concerned as demand so far this year has been weak while costs, which already increased significantly post-COVID, have skyrocketed due to the rupiah depreciation.
https://www.channelnewsasia.com/commentary/indonesia-aviation-market-southeast-asia-traffic-passenger-growth-5932076
