A laissez-faire regime born after Suharto's fall has let the archipelago's carriers point the way for Asia For all the talk of a cheap-flights revolution in Asia, fares remain high on most routes and incumbents are protected by reams of invisible red tape preserving domestic and international skies. Not so in Indonesia, where an air travel boom began when skies were opened five years ago. The number of air travellers doubles every three years. Indonesia is Asia's low-fare, no-frills future. Last year 16 million trips were taken, against 6.6 million in 1999. The country's economy is still being put back together, growing just 4 per cent a year. Yet passenger numbers are growing five or six times as fast. Typically air travel expands twice as fast as an economy. Indonesia shows the future for airlines and passengers when regulations are rolled up in huge markets such as China and India. A lack of fast, expansive roads and railways means big opportunity for low-cost airlines. Indonesia's policy became possible after the Suharto regime collapsed in 1998, giving new players at least a brief opportunity to influence policy. With the economy choking, airlines' outlook was dreadful. 'We, the regulators and the operators, thought about how to solve the problem. We concluded that the relaxation of regulations was the best way. Now we can see air transport is growing very rapidly,' said Santoso Eddy Wibowo, director of domestic air transport at the Directorate General of Air Communication (DGAC). So is the DGAC's work. Before 1999 it had five scheduled carriers to oversee plus a few charter operators. There are now 37 licences on issue, a few more pending and 23 scheduled airlines flying. Despite the stodgy economy, cheap fares have brought air travel into the grasp of millions more. 'It's getting very, very cheap travelling by plane. The population is very big and the quickest way to get around thousands of islands is by air. It's even cheaper than ship on some routes,' Bali Air president Kelly Humardani said. Lion Airlines president and founder Rusdi Kirana concurs: 'The main reason is the low fare. Only 16 million trips were taken last year. As a percentage of total population that's small. There's a lot of potential if prices are kept low. Lion pioneered low fares. Within four years it has taken the largest share of the domestic market.' Merciless competition leaves no room for cost creep. Mr Humardani said: 'The domestic airlines have to keep costs below three cents per kilometre or they're not going to survive. There are some airlines here that are not set up as low-cost carriers, but are having to sell at a low fare. I believe some have costs around five cents per kilometre. The only way for them to survive is to be more efficient.' Airline bosses bemoan the laissez faire policy. Mr Humardani said: 'I think many of the airlines are screaming now, they are expecting the government to control capacity.' A respite from the Darwinian scrum looks unlikely. Mr Wibowo said: 'Some people worry there are too many airlines in Indonesia. From our point of view, as the government, we are only interested in services, in ensuring that supply meets demand.' It also reflects a broader, long-term view. 'We want to teach the airline industry to be competitive. The strategic environment is globalisation, it's very dynamic,' he said. Mr Humardani said: 'The airport now is getting very crowded, just like the bus or train station. Some of the airports just cannot handle any more. That is the problem when you have high growth. The airports are not ready, there are not enough parking bays.' Competition is searing the industry. Airlines battle for crews. 'It's quite a serious problem,' Mr Humardani said. 'Pilots [and cabin crew] leave to join new airlines that offer higher wages.' Mr Wibowo said: 'The problem we are facing in the very near future is human resources. We should push training.' Already many European and Argentinian pilots work in Indonesia. Meanwhile overseas training bills are mounting as not all training can be done in Indonesia now. Engineering, ground handlers, caterers and other suppliers are battling for contracts, raising safety concerns. Mr Humardani said: 'The public are starting to question safety. They're wondering if costs are being cut on maintenance. Is the airline doing any maintenance with low fares?' He admits to having some concerns himself. Isolated incidents and, as yet, unrealised fears are not passing unnoticed. DGAC is adding more staff and increasing training while working closely with the International Civil Aviation Organisation. Mr Wibowo said: 'Safety is our first priority.' Ultimately better airports, air traffic control, services and training are the solutions to congestion and safety issues. With French money, two state-of-the-art air traffic control centres at Jakarta and Makassar - which opens next year - will replace the existing four centres. 'The difficult side is the facilities. We haven't solved it completely, but we are working on it,' Mr Wibowo said. Once the exclusive domain of government, opportunities in facilities abound. Foreign engineering companies, such as Air North Icelandic and SAS Component are prospering alongside consultants like Parc Aviation. Indo-Swiss Aviation managing director Jim Eckes said: 'It's a pro-aviation development atmosphere with all the government officials.' The Centre for Asia-Pacific Aviation said in a report: 'The breakneck growth of air services also has significant implications for airport and air navigation service infrastructure which will need to be addressed as a matter of urgency. As with Garuda, privatisation is seen as the vehicle to attract greater levels of external investment.' Britain's BAA, the world's largest airport operator, along with Schipol and Fraport are among the big names flirting with Indonesia. Lion has an agreement to build and operate Jakarta International's third terminal. Once its government contract is signed it will seek partners to help create a terminal matching Singapore's airport. Investors are needed for Medan's airport and Bali's terminal. Airlines, which can be 49 per cent foreign-owned, are also expected to draw investors. 'Provided the political climate remains stable, there is a reasonable prospect that foreign investment levels will improve this year,' the Centre for Asia-Pacific Aviation said.