Indonesia’s flag carrier Garuda was scheduled to sign a deal for 11 Airbus passenger jets yesterday, during a visit by British Prime Minister David Cameron aimed at boosting trade and investment.
The purchase of the A330 jets, worth about US$2.5 billion and powered by UK supplied Rolls-Royce engines, reflects the growing consumer demand that is attracting political leaders and financiers to court Southeast Asia’s largest economy.
“This deal between Airbus and Garuda Indonesia Airlines is great news for the UK aerospace industry,” Cameron told reporters after arriving in Jakarta on a 24-hour visit.
Cameron’s coalition government is trying to boost British manufacturing to reduce reliance on financial services and limit exposure to the crisis-hit eurozone by doing more business with fast-growing emerging markets.
Cameron, accompanied by about 35 executives on an Asian tour, has said he sees enormous potential in Indonesia and the British delegation is expected to focus on possible deals in energy, construction, retail, pharmaceutical, defense and financial services sectors.
The new Airbus jets will increase by two-thirds the number of long-haul A330s already delivered to Garuda or on order from the airline. Its main domestic rival Lion Air in February signed a record US$22 billion deal for planes from Boeing Co.
That deal was first announced during a visit to Jakarta by US President Barack Obama. Leaders from China and France also visited last year together with large delegations of executives looking for investment opportunities, especially to overhaul Indonesia’s dilapidated infrastructure.
Indonesia’s aviation sector is rapidly expanding as a growing middle class and business executives opt to travel fly across the archipelago of 17,000 islands. Many islands lack good roads or railways, while ship connections are sporadic and slow, and deadly transport accidents are common.
Many airlines use ageing propeller planes to navigate remote and mountainous eastern provinces such as Papua, where a Garuda plane skidded off the runway yesterday. Garuda was removed from a EU blacklist on Indonesian carriers in 2009.
Garuda chief executive Emirsyah Satar said he planned to use the new Airbus planes to expand in the Asia-Pacific, including to China, South Korea and Australia.
Southeast Asian carriers have ordered US$47 billion worth of aircraft for the coming decade.