Indonesia’s first commercially produced passenger plane is nearly ready for its maiden flight, a feat that may greatly aid the burgeoning industry. But state-owned manufacturer Dirgantara Indonesia must overcome a series of hurdles before it might probably compete internationally.
The factory, positioned near Bandung airport, east of Jakarta, is busy assembling Dirgantara’s 19-seat propeller plane, the N219. The company goals to finish the vital formalities in April, conduct the N219’s maiden flight in mid-year and ship the primary plane in 2018, said Andi Alisjahbana, its director of technology and development.
Long history
Founded in 1976, Dirgantara’s predecessor was initially headed by B.J. Habibie, an aerospace engineer who had previously served as vice chairman of a German aircraft manufacturer and later became Indonesia’s president. The company successfully flew an indigenous 50-70-seat turboprop — called the N250 — in 1995, however the project stalled amid Asia’s currency crisis and political unrest.
Dirgantara has a partnership with Airbus — originally formed within the late Nineteen Seventies with Spain’s CASA, which later became a part of the European aerospace giant. The two corporations produce planes through a three way partnership, and Dirgantara produces helicopters under license from Airbus. The Indonesian company has delivered greater than 400 business and military aircraft to domestic and foreign customers.
Demand for air travel is booming across the vast Indonesian island nation. The N219 takes lower than 800 meters to take off and land, making it ideal for distant areas with limited runway space. The Dirgantara also has a price advantage—the N219 is 20% cheaper than its predominant competitor, the Canadian DHC-6 Twin Otter, because of local sourcing of components similar to window panes and landing gear.
Dirgantara has secured provisional orders for nearly 100 N219s from domestic customers, including budget carrier Lion Air, and has announced plans for a 50-seater. It also goals to succeed in other emerging markets similar to Africa.
Small planes, big potential
Turboprops are typically used for flights of 1,000 km or less. Development and production of small planes has slowed in developed markets, where well-developed rail and road networks suppress demand for short-haul flights. However, industry group Japan Aircraft Development Corp. predicts that the fleet of passenger turboprops within the Asia-Pacific region will grow 55 percent between 2015 and 2035 to 1,394, with latest orders worldwide exceeding $65 billion.
Indonesian aircraft manufacturer Regio Aviasi Industri is working on the R80, an 80-90-seat turboprop. Dirgantara will produce it, with deliveries starting in 2022.
Large European and American players also use Indonesia as a production base. Airbus moved all production of its NC212 cargo plane to Dirgantara by 2013. The French giant also sources components for the A380 and the state-of-the-art A350XWB from Indonesia.
Honeywell International, the American company that supplies the engine for the NC212 aircraft, operates a plant on Bintan Island that produces about 120 kinds of aircraft electronics, including black boxes.
Still in its infancy
However, the sky shouldn’t be clear for Dirgantara. The manufacturer plans to supply the N219 for about $5.5 million, expecting to interrupt even after selling about 200 aircraft. However, sales are prone to be limited for now to the lower than 100 aircraft for which Dirgantara has received provisional orders, meaning the project is unlikely to show a profit even with generous government subsidies.
The N219, which is Indonesia’s first indigenous aircraft, along with the shelved N250, could have design flaws, circuitry issues or other problems that would delay business launch. The project is already behind schedule, with a maiden flight scheduled for mid-2016 in 2015. Further delays could increase development costs.
Dirgantara also lacks the brand power of its foreign rivals. France’s ATR is the worldwide market leader for midsize turboprops with 50 to 70 seats, with greater than 1,500 planes sold. Brazil’s Embraer controls greater than half of the marketplace for planes with 70 to 130 seats.
Dirgantara is working on obtaining a national certificate for the N219 aircraft. Exporting the brand new aircraft would require a global certificate and extensive marketing activities.
A broader trend
Indonesia isn’t the one emerging market working to nurture a nascent aerospace industry. Other countries are hoping to point out their growth by making inroads right into a field that has long been dominated by big American and European players.
One of probably the most distinguished examples is China, whose first domestic passenger plane, the ARJ21, began business flights last June. Developed by state-owned Commercial Aircraft Corp. of China, or Comac, the ARJ21 seats 70 to 80 passengers. The company is in search of to sell more of the planes domestically and in emerging markets, with government support.
Hindustan Aeronautics delivered the primary indigenously produced fighter jet to the Indian air force in 2015 and likewise intends to develop a passenger plane. Turkey has unveiled plans for a public-private partnership to develop passenger planes, with the aim of introducing a jet and a turboprop by 2023.
Foreign corporations, attracted by the expansion potential of emerging markets, are partnering with local competitors, including on military aircraft. Korea Aerospace Industries has partnered with Dirgantara to develop a fighter jet that is ready to start production around 2025.
This article was first published in http://asia.nikkei.com/ on March 13, 2017
