Nusantara: Between sky and earth could the PPP be the solution for Indonesian airport infrastructures?

• We present and analyze the different challenges that Indonesia faces for funding airport infrastructure.
• The Indonesian airport infrastructures require important funding to insure their expansion and to satisfy a dynamic demand.
• Geographical barriers, the institutional framework and a diversity of airport situations are important constraints for Indonesia.
• The public private partnership solution for funding the Indonesian airport expansion requires an original scheme.Implementation of the PPP solution implies the management of an institutional change.

This paper deals with the airport infrastructures in Indonesia and it investigates the possibility of defining a solution for their funding. Indeed the economic development in Indonesia requires huge capital needs for completing the numerous plans of investment in transport and particularly for the airport infrastructures.More than 63% of the budget for the airport infrastructure needs is not funded, while the characteristics of airport infrastructure investments involve large amounts of money with a very low rate of return. It raised the questions how to attract the private investors and to conceive appropriate contracting dimensions for associating the private sector with the Indonesian government.The Aviation Act No. 1/2009 stated that the government will let an important role to the private sector related to the transfer of management and ownership of airport infrastructures. It means also that the Indonesian government will support the creation of public private partnerships (PPP).Therefore it required to think how the Indonesian government could create a more conductive climate to stimulate the private sector investment for the Indonesian airport infrastructures.