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The International Comparative Legal Guide to:

Aviation Law 2015

3rd Edition
A practical cross-border insight into aviation law

Published by Global Legal Group, with contributions from:

Alexander Holburn Beaudin + Lang LLP
Ali Budiardjo, Nugroho, Reksodiputro
Arnecke Siebold Rechtsanwlte Partnerschaftsgesellschaft
Arte Law Firm
Bahas, Gramatidis & Partners
Cabinet BOPS SCP Bouckaert Ormen Passemard
Chacn & Rodrguez, S.C.
Christodoulou & Mavrikis Inc.
Condon & Forsyth LLP
DDSA De Luca, Derenusson, Schuttoff e Azevedo
Dingli & Dingli Law Firm
Kaye Scholer LLP
Kromann Reumert
Kubes Passeyrer Attorneys at Law

Locke Lord Edwards LLP

Maciel, Norman & Asociados
McAfee & Taft
MMMLegal - Legal Counsels
NDR Neville de Rougemont & Associates
Ozturk & Partners
Rojs, Peljhan, Prelesnik & Partners
Salazar & Asociados
Studio Pierallini
Taylor English Duma LLP
Ventura Garcs & Lpez-Ibor Abogados
Worldwide Airports Lawyers Association (WALA)

The International Comparative Legal Guide to: Aviation Law 2015

General Chapters:

The Use of Personal Data by the Commercial Aviation Industry Alan Meneghetti,
Locke Lord Edwards LLP

Contributing Editors
Alan Meneghetti, Locke Lord
Edwards LLP and Philip
Perrotta, Kaye Scholer LLP

The Aviation Industry Constant Change Leading to Tales of the Unexpected Philip Perrotta,
Kaye Scholer LLP

Recent Developments in U.S. Aviation Law 2015 Unmanned Aircraft Systems

Donald R. Andersen, Taylor English Duma LLP

Head of Business
Dror Levy

Sales Director
Florjan Osmani

Commercial Director
Antony Dine
Account Directors
Oliver Smith, Rory Smith

The Cape Town Convention: An Evolving Process (with Side Notes on Selected Issues)
Erin M. Van Laanen & Maria E. Gonzalez, McAfee & Taft


The Need to Extend WALAs Presence in the Airport Industry Alan Meneghetti & Michael Siebold,
Worldwide Airports Lawyers Association (WALA)


Country Question and Answer Chapters:

Senior Account Manager

Maria Lopez


Maciel, Norman & Asociados: Rogelio N. Maciel & Maria Laura Maciel


Sales Support Manager

Toni Hayward


Kubes Passeyrer Attorneys at Law: Dr. David Kubes



Salazar & Asociados: Sergio Salazar-Machicado & Ignacio Salazar-Machicado 32


DDSA De Luca, Derenusson, Schuttoff e Azevedo Advogados:

Ana Luisa Castro Cunha Derenusson

Senior Editor
Suzie Levy
Sub Editor
Nicholas Catlin
Group Consulting Editor
Alan Falach
Group Publisher
Richard Firth
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ISBN 978-1-910083-32-1
ISSN 2050-9839
Strategic Partners

10 Canada

Alexander Holburn Beaudin + Lang LLP: Darryl G. Pankratz & Michael Dery 45

11 Denmark

Kromann Reumert: Jakob Bernhoft & Julie Bak-Larsen


12 France

Cabinet BOPS SCP Bouckaert Ormen Passemard: Aurlia Cadain


13 Germany

Arnecke Siebold Rechtsanwlte Partnerschaftsgesellschaft: Holger Brskens

& Ulrich Steppler

14 Greece

Bahas, Gramatidis & Partners: Betty Smyrniou

15 Indonesia

Ali Budiardjo, Nugroho, Reksodiputro: Theodoor Bakker & Emir Nurmansyah 80

16 Italy

Studio Pierallini: Laura Pierallini & Francesco Grassetti


17 Kyrgyzstan

Arte Law Firm: Aisulu Chubarova & Liliia Kim


18 Malta

Dingli & Dingli Law Firm: Dr. Tonio Grech


19 Mexico

Chacn & Rodrguez, S.C.: Samuel Chacn & Kaynict Prez De Gante


20 Poland

MMMLegal - Legal Counsels: Krystyna Marut

& Anna Burchaciska-Mako

21 Portugal

NDR Neville de Rougemont & Associates: Geoffrey Graham

& Vicky Rodrigues

22 Slovenia

Rojs, Peljhan, Prelesnik & Partners: Alexander Uro Koenina

& Sonja Radoevi

23 South Africa

Christodoulou & Mavrikis Inc.: Chris Christodoulou

24 Spain

Ventura Garcs & Lpez-Ibor Abogados: Alfonso Lpez-Ibor Alio

& Pablo Stger Prez

25 Switzerland

VISCHER AG: Urs Haegi & Dr. Thomas Weibel


26 Turkey

Ozturk & Partners: Yasar Ozturk


27 United Kingdom

Locke Lord Edwards LLP: Alan Meneghetti & Kaye Scholer LLP:
Philip Perrotta

28 USA

Condon & Forsyth LLP: Bartholomew J. Banino & Nicole M. Smith




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Chapter 15


Theodoor Bakker

Ali Budiardjo, Nugroho, Reksodiputro

1 General

Please list and briefly describe the principal

legislation and regulatory bodies which apply to and/
or regulate aviation in Indonesia.

On 12 January 2009, the Government of Indonesia passed Law No.

1 of 2009 concerning Aviation, (the Aviation Law) which overall
was an amalgamation of the many laws and regulations governing
the aviation industry in Indonesia, as well as the recognition of the
Convention on International Interests in Mobile Equipment and its
Aircraft Protocol (CTC).
In respect of the regulatory bodies, the Minister of Transportation
through the Directorate General of Civil Aviation of the Department
of Transport of the Republic of Indonesia (DGCA) governs
virtually all aviation matters that are within the legal jurisdiction of
the Republic of Indonesia.

What are the steps which air carriers need to take in

order to obtain an operating licence?

Article 41 of the Aviation Law provides two different Operating

Licences for air carriers to obtain which are:

the Air Operators Certificate (AOC), which is extended to an

Indonesian legal entity operating civil aircraft for commercial
transportation purposes; and


the Aircraft Operating Certificate, which is extended to an

Indonesian individual or legal entity operating civil aircraft
for non-commercial air transportation.

Pursuant to Article 42 of the Aviation Law, in order for an operator

(being an Indonesian legal entity in the form of a limited liability
company) to obtain an AOC, the operator must fulfil the following



having a Commercial Air Transportation Business Licence;


owning and possessing the number of aircraft in accordance

with the type of business licence/permit owned by the
respective operator/company;


having and/or possessing competent aircraft personnel in

a total number of adequate ratio to operate and maintain


having an organisational structure of minimum divisions of

operation, maintenance, safety, and quality control assurance;


having competent management personnel in an adequate



having and/or possessing aircraft operational facilities;


Emir Nurmansyah


having and/or possessing adequate spare-part supplies;


having a company operation manual and a company

maintenance manual;


having standard aircraft operating procedures;


having standard aircraft maintenance;


having educational facilities and company training manuals;


having company quality assurance manuals for keeping up

continuous operating and technical performance; and


having a safety management system manual.

In line with letter a. of the above provisions of the Aviation Law, the
DGCA confirmed that to obtain an AOC, an operator/company must
first obtain a Commercial Air Transportation Business Licence.
After obtaining a Commercial Air Transportation Business Licence,
the operator/company must then submit an application for an AOC
to the DGCA. In accordance with Article 118 paragraph (1) letter a.
of the Aviation Law, the application must be submitted no later than
12 months after the operator/legal entity obtained its Commercial
Air Transportation Business Licence. The 12-month period is
intended for the operator/company to realistically implement and
perform actual air transportation activities (de facto) by operating
the minimum number of aircraft owned and possessed in accordance
with its intended scope of business or activities. If the holder of the
Commercial Air Transportation Business Licence does not actually
undertake air transportation activities by operating aircraft during
the 12-month period, then the Commercial or Non-Commercial
Air Transportation Business Licence issued shall be deemed to be
automatically invalid.
Another requirement during the 12-month period is for the air
carrier/operator to own and possess a certain number of aircraft
for its fleet of operations. According to Article 118 paragraph (2)
of the Aviation Law, an air carrier/operator having the following
Commercial Air Transportation Business Licence must:

for a Scheduled Commercial Air Transportation Business

Licence/Permit: own at least 5 (five) units of aircraft and
possess at least 5 (five) units of aircrafts of the type(s) suitable
for supporting its business sustainability in accordance to the
routes served;

b. for a Non-Scheduled Commercial Air Transportation

Business Licence/Permit: own at least 1 (one) unit of
aircraft and possess at least 2 (two) units of aircraft of the
type(s) suitable for supporting its business sustainability in
accordance to the operational areas to be served; and

for Commercial Air Transportation specifically for Cargo

Transportation: own at least 1 (one) unit of aircraft and
possess at least 2 (two) units of aircraft of the type(s) suitable
for supporting its business sustainability in accordance to the
routes and operational areas to be served.

Published and reproduced with kind permission by Global Legal Group Ltd, London



What are the principal pieces of legislation in

Indonesia which govern air safety, and who
administers air safety?


Law No. 1 of 2009 concerning Aviation (the Aviation Law);


Government Regulation No. 3 of 2001 concerning Aviation

Security and Safety; and


Government Regulation No. 40 of 1995 as amended by

Government Regulation No. 3 of 2000 concerning Air

Further to the above three pieces of principal legislation, the

Minister of Transportation has released many Civil Aviation Safety
Regulations (CASR) which regulate the specific air safety matters
within the jurisdiction. In this regard, the Minister of Transport
via the DGCA is still the main institution/regulatory body which
administers air safety.

Is air safety regulated separately for commercial,

cargo and private carriers?

No. It applies to all subjects related to air transportation.


Are air charters regulated separately for commercial,

cargo and private carriers?

Yes. In this regard, each commercial, cargo and private carrier is

regulated separately via its air transportation licence; respectively:

the Commercial Air Transportation Licence specifically for

Cargo Transportation;


the Non-Scheduled Commercial Air Transportation Business

Licence/Permit; and


the Scheduled Commercial Air Transportation Business



As regards international air carriers operating in

Indonesia, are there any particular limitations to be
aware of, in particular when compared with domestic
or local operators? By way of example only,
restrictions and taxes which apply to international but
not domestic carriers.

The Aviation Law provides that the general rule for aircraft that can
be operated in Indonesia is that they can be both Indonesian-registered
aircraft (under PK registration) and foreign-registered aircraft (Article
24 of the Aviation Law). However, Article 63 of the Aviation Law, in
line with SKEP/195/IX/2008 concerning the Guidelines of Obtaining
a Flight Approval (SKEP 195), specifies that only Indonesianregistered aircraft can be operated within the jurisdiction of the
Republic of Indonesia. An exception to this rule, which is regulated
under the Aviation Law and SKEP 195, is that for certain situations and
for a limited time only, foreign-registered aircraft may be operated after
obtaining approval from the Minister of Transportation and fulfilling
the standard of airworthiness certificate in Indonesia. The particular
situations and limited time periods that allow for this exception are:

the unavailability of aircraft capacity in Indonesia;


the unavailability of the type and capacity of aircraft in

Indonesia for the air transportation activities;


natural disasters; and/or


humanitarian aid operations.

What is meant by within a limited period of time is that the timing

for foreign aircraft operation(s) is limited until such operation(s) can
be handled by Indonesian aircraft.

According to verbal confirmation from the DGCA, the certain
situations and limited time periods as mentioned above were
interpreted by the DGCA as allowing foreign-registered aircraft to
operate under Indonesian territory as long as they obtain the above
approvals and standard airworthiness certification requirements
from the Minister and the DGCA. However, we should keep in
mind the certain priority from the DGCA over Indonesian-registered
aircraft especially once such operations can be handled by the said
Indonesian aircraft.
As further regulated, Clause 121.155 of Civil Aviation Safety
Regulation (CASR) Part 121 amendment 6 concerning Certification
and Operating Requirements: Domestic, Flag and Supplemental Air
Carriers (CASR 121) provides further exception for ForeignRegistered Aircraft in which they may be operated in Indonesia
as long as the aircraft is registered in a country which is party
to the Convention on International Civil Aviation (Chicago
Convention). We understand that the foreign aircraft will be/or
is registered under the N-registry under the FAA, therefore this is
applicable to the respective aircraft. Furthermore, the aircraft must
be carrying an appropriate airworthiness certificate issued under
the FAA, as well as meeting the registration and identification
requirements of the FAA. However, we should note that the type and
design of the aircraft must also be approved under the Indonesian
certification and comply with all of the requirements of the CASRs
that would be applicable if the aircraft were registered in Indonesia
(including the standard Aircraft Airworthiness Certificate).


Ali Budiardjo, Nugroho, Reksodiputro

If the aircraft does not meet the certification as mentioned above,

we were informed by the DGCA that the aircraft must undergo a
homologation process in order to meet the certificate of validation of
the type of aircraft engines and aircraft propellers from the DGCA.
The said certificate of validation will be issued once the engines and
aircraft propellers have been examined and tested to fit the national
standard for aircraft in Indonesia.
Regarding the above exceptions for foreign-registered aircraft,
Clause 129.11 of CASR Part 129 concerning Operations: Foreign
Air Carriers and Foreign Operators of Indonesian-Registered
Aircraft, regulates the prospect of operating the respective foreignregistered aircraft where each foreign air carrier shall conduct
its operations to and from the jurisdiction of the Republic of
Indonesia in accordance with the operations specifications issued
by the DGCA and in accordance with the Standard Recommended
Practices contained in Part I (international commercial air transport)
of annex 6 to the Chicago Convention, which includes:

airports to be used;


routes or airways to be flown;


such operational rules and practices as are necessary to prevent

collisions between foreign aircraft and other aircraft; and


the registration markings of each Indonesian-registered aircraft.

Subsequently, CASR Part 91 concerning General Operating and

Flight Rules (CASR 91) regulates more specific requirements
of the foreign-registered aircraft in conducting their operations in
the jurisdiction of the Republic of Indonesia. As specified under
91.203, these requirements are, for example, the documents to be
carried during flight operations (flight permit, authorisations from the
DGCA, an effective Indonesian or foreign certificate of registration
issued to its owner or for operation within Indonesia), which are
also in line with CASR 135 concerning Certification and Operating
Requirements: for Commuters and Charter Air Carriers (CASR
135), where 135.153 (b) provides an exception for not meeting the
requirements under 135.153 (a) for foreign-registered aircraft as long
as they are under the registration of a contracting state.
Part 91.711 of CASR 91 also further provides the special rules for
foreign civil aircraft to operate in Indonesia, such as the standard


Published and reproduced with kind permission by Global Legal Group Ltd, London



Ali Budiardjo, Nugroho, Reksodiputro


equipment of the aircraft (radio and navigational equipment), and

the capability of the pilots piloting the aircraft (pilot certificate
under IFR, thoroughly familiar with Indonesian en route, holding
and letdown procedures, and even conducting two-way radio
communications, as well as English language skills).

Are airports state or privately owned?

charges, the Directorate of Airworthiness and Aircraft Operations

(DAAO), under the DGCA, has issued a verbal statement that
they will accept hypothec recordation applications provided that the
aircraft are secured. The recordation at the DAAO merely serves as
a form of acknowledgment. This acknowledgment is stated on the
aircrafts registration card.

All public airports in the Indonesian jurisdiction are in the form of a

State-Owned Enterprise.

Do the airports impose requirements on carriers

flying to and from the airports in Indonesia?

In principle and pursuant to the Aviation Law, all foreign and

Indonesian civil aircraft flying to and from airports in Indonesia
shall only take off and land in each of the predetermined airports.

What legislative and/or regulatory regime applies to

air accidents? For example, are there any particular
rules, regulations, systems and procedures in place
which need to be adhered to?

Please refer to:


Government Regulation No. 40 of 1995 concerning Air

Transportation; and


the Regulation of the Minister of Transportation No. 77

of 2011 as amended by the Regulation of the Minister of
Transportation No. 92 of 2011 concerning Air Transportation
Carriers Responsibilities.

1.10 Have there been any recent cases of note in Indonesia

involving air operators and/or airports?

One of the most recent and most publicised cases was the Batavia
Airline case. On 30 January 2013, through Decision No. 77/
Pailit/2012/PN.Niaga, Jkt. Pst, the Central Jakarta District Court
ruled the bankruptcy of PT Metro Batavia (Batavia Airline). Prior
to the bankruptcy decision, the said air operator owed large numbers
of debts to several creditors. However, since none of the debts
were being paid by Batavia Airline, International Lease Finance
Corporation (ILFC) and Sierra Leasing submitted a bankruptcy
petition to the Central Jakarta District Court, which resulted
in Batavia Airlines management accepting the decision of the
bankruptcy and ended the operations of the said air operator.

2 Aircraft Trading, Finance and Leasing


Does registration of ownership in the aircraft register

constitute proof of ownership?

No, it does not. Ownership over an aircraft must be further evidenced

by a bill of sale or any other proof of ownership documents that are
considered valid in Indonesia.

Is there a register of aircraft mortgages and charges?

Broadly speaking, what are the rules around the
operation of this register?

No. A register of aircraft mortgages and charges in Indonesia does

not exist. In light of there being no register of aircraft mortgages and




Are there any particular regulatory requirements

which a lessor or a financier needs to be aware of as
regards aircraft operation?

The lessee should execute authorisation for a deregistration request

in favour of the lessor in the form of an Irrevocable and Export
Request Authorisation (IDERA) form for the purpose of the lessor
applying for annulment of registration and export of the respective
aircraft in the event that the operator is in default of the lease.
The IDERA form should comply with the form set out by the DGCA,
as indicated by form DAAO 47-03 of November 2009. Please note
that the DGCA may from time to time update the IDERA form and
add or subtract any requirements that seem necessary.

Is Indonesia a signatory to the main international

Conventions (Montreal, Geneva and Cape Town)?

Indonesia is not a signatory to the 1933 Montreal Convention for

the Unification of Certain Rules Relating to the Precautionary Arrest
of Aircraft, or the 1948 Geneva Convention on the International
Recognition of Rights in Aircraft.
However, Indonesia is a signatory to the 2001 Cape Town
Convention on International Interest in Mobile Equipment and the
associated Protocol on Matters Specific to Aircraft Equipment. In
this regard, pursuant to Presidential Decree No. 8 of 2007 concerning
the Ratification of the Convention on International Interests in
Mobile Equipment on Matters Specific to Aircraft Equipment (PR
8/2007), certain provisions have been enacted under the Aviation

How are the Conventions applied in Indonesia?

Pursuant to PR 8/2007, Indonesia has declared the following

articles of the Cape Town Convention: Article 39 paragraph (1)
subparagraphs a. and b.; Article 40; Article 53; and Article 54
paragraph (2).
In regard to the Protocol on Matters Specific to Aircraft Equipment,
Indonesia has made declarations under PR 8/2007 of the following
articles: Article XXX paragraph (1) in respect of Article VIII;
Article XXX paragraph (1) in respect of Article XII; Article XXX
paragraph (1) in respect of Article XIII; Article XXX paragraph (2)
in respect of Article X, providing for the application of the entirety
of Article X; and Article XXX paragraph (3) in respect of Articles
XI, providing for the application of Alternative A in its entirety to
all types of insolvency proceeding protocol to the convention on
international interests in mobile equipment on matters specific to
aircraft equipment.
Further, Article 71 to Article 82 of the Aviation Law regulates the
provisions of International Interests over an Aircraft Object within
Indonesian legal jurisdiction. The matters provided within the
articles regulate the framework of how an international interest
over an aircraft object is applied in Indonesia (i.e. the Irrevocable
Deregistration and Export Request Authorisation (IDERA),
temporary legal action without the need of a court stipulation, etc.).

Published and reproduced with kind permission by Global Legal Group Ltd, London


Ali Budiardjo, Nugroho, Reksodiputro


What rights of detention are available in relation to

aircraft and unpaid debts?

Article 81 of the Aviation Law states: Certain invoices shall have

priority against other invoices from holders of international interests
registered on an aircraft object.
Certain invoices are invoices stated in the government declaration
in connection to the convention and protocol; they are as follows:

the rights of air transportation company employees to their

salaries not yet paid as a result of, or related to, utilisation
of an aircraft, which shall accrue since breach of contract is
declared under the agreement on the financing or leasing of
the aircraft object;


the rights of authorities in Indonesia related to taxes or other

unpaid invoices arising from, or relating to, utilisation of an
aircraft object, which shall accrue since breach of contract is
declared under the agreement on financing and leasing of the
aircraft object; and


other rights of the parties repairing an aircraft object while in

possession, as long as the repair has a value-added effect on
the aircraft object.


Is there a regime of self-help available to a lessor or a

financier of aircraft if it needs to reacquire possession
of the aircraft or enforce any of its rights under the
lease/finance agreement?

submission of a lawsuit against the main case to enforce the claims

in Indonesia and without having all parties undergo mediation
ordered by the court.
However, this does not apply to foreign judgments since at present
Indonesia does not yet have laws and procedures with respect to the
enforcement of foreign judgments, although Indonesia does have
policies as regards this issue. Nevertheless, a foreign or international
arbitral award can be recognised and enforced in Indonesia as
Indonesia has ratified the 1958 New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (New
York Convention) through Presidential Decision No. 34 of 1981.
The procedure for recognition and enforcement of foreign arbitral
awards is further regulated by Law No. 30 of 1999 on Arbitration
and Alternative Dispute Resolution (Arbitration Law).

Are there any rights of appeal to the courts from the

decision of a court or arbitral tribunal, and, if so, in
what circumstances do these rights arise?

Yes. Cases of the losing party may be appealed from the District
Court to the High Court and then ultimately to the Supreme Court.
Foreign Arbitral Awards (after they have been successfully enforced
in Indonesia through the District Court of Central Jakarta) may also
be appealed to the Indonesian Supreme Court.

4 Commercial and Regulatory


How does Indonesia approach and regulate joint

ventures between airline competitors?

No. The Aviation Law does not recognise the act of self-help.
Any attachment or seizure over (i) airplanes used for the purpose of
foreign countries, including postal transportation, with the exception
of trade transportation, and (ii) airplanes which are used for regular
public transportation and spare planes provided for such purposes,
is prohibited. However, there is no certainty that the code which
specifically provides for such prohibition is still applicable.

The approach is fairly straightforward and there is no specific

regulation which governs joint ventures between airline competitors.
One thing, however, is to ensure that the shares of the joint venture
airline shall be limited to 49% foreign shareholders and the
ownership of national shareholders should be a single majority.



Which courts are appropriate for aviation disputes?

Does this depend on the value of the dispute? For
example, is there a distinction in Indonesia regarding
the courts in which civil and criminal cases are

The appropriate courts would not depend on the value of the dispute
itself. The appropriate courts within the Indonesian court system
would be:

the General Court which includes the District Court

(Pengadilan Negeri), the High Court/Court of Appeal
(Pengadilan Tinggi), and the Supreme Court (Mahkamah
Agung) for disputes; and

the Commercial Court (Pengadilan Niaga) for Bankruptcy

and Intellectual Property Rights.

There is no distinction of courts in Indonesia between civil and

criminal cases as both go through the General Courts, but cases are
differentiated between civil and criminal cases.

What type of remedies are available from the courts

or arbitral tribunals in Indonesia, both on an i) interim
and a ii) final basis?

In the event the debtor breaches an agreement, the creditor may

obtain a decision from the state court for temporary action based
on the agreement between the debtor and the creditor without prior


3 Litigation and Dispute Resolution


How do the competition authorities in Indonesia

determine the relevant market for the purposes of
mergers and acquisitions?

This is determined mostly by notification and consultation by the

Business Actors toward the Indonesian Business Competition
Supervisory Commission (KPPU) in a mergers and acquisitions

Does Indonesia have a notification system whereby

parties to an agreement can obtain regulatory
clearance/anti-trust immunity from regulatory

No. The KPPU does not provide regulatory clearance or anti-trust

immunity in the event that a Business Actor notifies its transaction
that is considered as a transaction that is prohibited under Law No.
5 of 1999 concerning the Prohibition of Monopolistic Practices
and Unfair Business Competition (the Indonesian Competition
Law). Considering that there may be a complicated and specific
proposed transaction, Government Regulation No. 57 of 2010
on Merger, Consolidation of Business Entity and Acquisition of
Shares Which May Cause Monopoly Practice and Unfair Business
Competition (Regulation No. 57/2010) stipulates that a Business
Actor is able to conduct an oral or written consultation to the KPPU.


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Ali Budiardjo, Nugroho, Reksodiputro

The consultation phases consist of an initial assessment and a
comprehensive assessment. The initial assessment will be conducted
by the KPPU within 30 (thirty) days as of the receipt of a complete
form and documents by the KPPU. If the initial assessment shows
that the proposed transaction may cause monopoly practice and
unfair business practice, the KPPU may continue the assessment
into a comprehensive assessment within 60 (sixty) working days of
the completion of the initial assessment.
The response from the KPPU of this consultation will be in the form
of advice, guidance and/or written opinion concerning the proposed
transaction of merger, consolidation or acquisition of shares. Such
advice, guidance and/or written opinion shall not be misconstrued as
a form of approval or rejection of the proposed transaction, let alone
a regulatory clearance or immunity.

How does Indonesia approach mergers, acquisition

mergers and full function joint ventures?

The Indonesian Competition Law stipulates that a single company

controlling at least 50% of a certain market or 75% jointly with
another company (or companies) is deemed to have control or a
dominant position in the concerned market. Article 27 of the Law
provides further that the above thresholds (50% and 75%) also apply
to shareholdings. Under the Indonesian Competition Law, a Business
Actor (individual or company) is not allowed to have a shareholding
which results in the control of more than 50% by one Business Actor,
or 75% by two or three Business Actors, of a business engaging in one
certain product or service. Except for Article 17 on Monopoly, these
thresholds are not supported by criteria for determining the market
area. The law stipulates further, in connection with agreements, that
an investigation of unfair oligopoly or oligopsony (Article 4 and
Article 13) issues may arise if an agreement results in the acquisition
of a 75% market share of a certain product or service.
As is the general case with most competition and anti-trust laws,
unless it is specifically mentioned, an excess over the above
thresholds does not necessarily mean that the relevant company/
party has violated the Indonesian Competition Law. Further
investigation, based on either the Commissions own observations
or a complaint from another party, is necessary.

Please give an outline of the procedure, including

time frames for clearance and details of any costs of

Business Actors must submit notification within 30 (thirty) working

days after the date when the merger, consolidation, or acquisition
has became legally effective. For limited liability companies,
the effective date of the merger, consolidation or acquisition is
in accordance with the elucidation of Article 133 of Law No. 40
of 2007 concerning Limited Liability Companies (Law No.
40/2007), namely the date of:

the Ministers approval of amendments to articles of

associations in the case of a merger;


a receipt of notification in the case of amendments of articles

of association as provided by Article 21 paragraph (2) of Law
No. 40/2007 even when there is no amendment to the articles
of association; and


the approval of the Minister of the deed of establishment in

the case of a consolidation.

However, if the business entities which carry out the merger are not
limited liability companies, the notification must be submitted, at
the latest, within 30 (thirty) working days of the date of the signing
of the merger, consolidation or acquisition agreement between



the parties. However, in any case, for special circumstances,
the obligation to notify the KPPU shall be conducted 30 (thirty)
working days after all transactions resulting in the effectiveness of
such merger, consolidation, or acquisition have been completed.
Article 8 of Regulation 57/2010, and KPPU Regulation 10/2011,
provide the following procedure of notification to the KPPU:

Business Actors who fulfil the requirements for Notification

as specified in Article 5 of Regulation 57/2010 and the
contributing factors of a mandatory notification under the
Indonesian Competition Law that are specific to acquisition
of shares, must submit written Notification to the Commission
at the latest within 30 (thirty) business days.


Notification must be made in writing by the Business Actor

resulting from the merger, consolidation and acquisition of
shares by filling in form M1 for merger of business entities,
form K1 for consolidation of business entities, and form A1
for acquisition of shares of companies.


The form for Notification must be accompanied by required

documents and other documents that the Commission deems


The Commission is entitled to ask for additional documents

from Business Actors if this is deemed necessary to carry out
its assessment.

In the event that a Business Actor fails to submit a written notification

on the merger, consolidation, or acquisition within 30 (thirty) days
after the merger, consolidation, or acquisition becomes effective,
the KPPU will impose an administrative sanction in the amount of
Rp. 1,000,000,000.00 (one billion rupiah) for every one-day delay,
provided that the maximum administrative sanction that can be
imposed is Rp. 25,000,000,000.00 (twenty-five billion rupiah).
Moreover, in any case, if the KPPU deems the transaction of merger,
consolidation or acquisition to be in violation of the applicable laws
and regulations, the KPPU will impose a sanction constituting
administrative sanctions as follows:

to revoke contracts;


to order the entrepreneurs to end vertical integration;


to order the entrepreneurs to stop activities proven to

have caused monopolistic practises and/or unfair business
competition and/or damages to the public;


to order the entrepreneurs to end the abuse of their dominant



to revoke the merger of the companies and acquisition of shares;


to impose compensation for damages; and/or


to impose a fine at the lowest in the amount of Rp.

1,000,000,000 (one billion rupiah) and at the highest in the
amount of Rp. 25,000,000,000 (twenty-five billion rupiah).

4.6 Are there any sector-specific rules which govern the

aviation sector in relation to financial support for air
operators and airports, including (without limitation)
state aid?

There are no specific rules in this matter. The tax authorities, however,
waive the requirement of being subject to value-added tax when an
Indonesian aircraft operator imports an aircraft in the jurisdiction.

Are state subsidies available in respect of particular

routes? What criteria apply to obtaining these

There are none available. However, the DGCA will usually provide
more support towards undeveloped routes in the eastern region of

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Ali Budiardjo, Nugroho, Reksodiputro

What are the main regulatory instruments governing
the acquisition, retention and use of passenger data,
and what rights do passengers have in respect of
their data which is held by airlines?

The Aviation Law and Government Regulation No. 25 of 2008

concerning Air Transportation Operations, in general govern the
responsibilities for delivering passenger data (passenger manifest)
to the aviation authorities. Nevertheless, Indonesian laws and
regulations are generally silent in respect of the specific issues
relating to the retention of passenger data by an airline. However, the
laws and regulations in Indonesia recognise the right of protection
of privacy and freedom and confidentiality in correspondence.
Specifically, Law No. 11 of 2008 concerning Electronic Information
and Transactions (Electronic Information and Transaction Law)
prohibits a person from distributing, transmitting or providing access
to electronic information which contains contents against propriety.
However, the Electronic Information and Transaction Law poses an
obstacle to the disclosure of the identity of an offender, as it stipulates
that the use of any information through electronic media that involves
personal data must be made with the consent of the person concerned
unless provided by a legal stipulation or grounds for disclosure.

In the event of a data loss by a carrier, what

obligations are there on the airline which has lost the
data and are there any applicable sanctions?

The laws and regulations are silent in regard to this matter.

4.10 What are the mechanisms available for the protection
of intellectual property (e.g. trademarks) and other
assets and data of a proprietary nature?

Basically, registration of a trademark to the Directorate General of

Intellectual Property Rights of the Republic of Indonesia is sufficient
protection towards assets and data of a proprietary nature.
4.11 Is there any legislation governing the denial of
boarding rights?

Yes, the Aviation Law provides the right of an air carrier to deny a
passenger to board, for example, if the passenger is considered to be
ill/sick, unless the passenger can surrender a doctors letter which
provides that the passenger may travel through air.

4.13 Are the airport authorities governed by particular

legislation? If so, what obligations, broadly speaking,
are imposed on the airport authorities?

Yes, Articles 192 to 260 of the Aviation Law govern the obligations,
rights and responsibilities, as well as the existence, of an airport
4.14 To what extent does general consumer protection
legislation apply to the relationship between the
airport operator and the passenger?




Law No. 8 of 1999 concerning Consumer Protection (Consumer

Protection Law) has generally implemented safety and aviation
security aspects, passenger services and aircraft maintenance, as well
as the steps which must be taken when reporting any inconveniences
and violations.
4.15 What global distribution suppliers (GDS) operate in

GDSs operating in Indonesia include Amadeus, Abacus Distribution

System, Galileo International, Sabre, Wordspan and Apollo, to name
just a few.
4.16 Are there any ownership requirements pertaining to
GDSs operating in Indonesia?

So far, ownership pertaining to GDSs which operate in Indonesia, is

still 100% open to foreign investment.
4.17 Is vertical integration permitted between air operators
and airports (and, if so, under what conditions)?

The current laws and regulations in Indonesia are silent in regard

to this matter.

The authors wish to express their gratitude to thank Putra Ariyavira,
associate at Ali Budiardjo, Nugroho, Reksodiputro, for his valuable
assistance in the preparation of this chapter.

4.12 What powers do the relevant authorities have in

relation to the late arrival and departure of flights?

The DGCA has full powers to apply administrative sanctions

towards airlines arriving/departing late according to schedule.


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Ali Budiardjo, Nugroho, Reksodiputro


Theodoor Bakker

Emir Nurmansyah

Ali Budiardjo, Nugroho, Reksodiputro

Graha CIMB Niaga, 24th Floor
Jl. Jendral Sudirman Kav. 58
Jakarta 12190

Ali Budiardjo, Nugroho, Reksodiputro

Graha CIMB Niaga, 24th Floor
Jl. Jendral Sudirman Kav. 58
Jakarta 12190

Tel: +62 21 250 5125 / 5136

Fax: +62 21 250 5001

Tel: +62 21 250 5125 / 5136

Fax: +62 21 250 5001

Mr. Theodoor Bakker (FCIArb) graduated from Leiden University in

the Netherlands, is admitted to the Amsterdam Bar and is a registered
Foreign Lawyer under the Indonesian Advocates Law. He has
worked in Southeast Asia since 1984, over time building up extensive
experience in: direct foreign investment; project finance work,
including private power and petrochemical projects; aircraft finance;
infrastructure development; and general manufacturing investment.
He has published various articles on insolvency and cross-border
investment issues, and teaches at the Faculty of Law of the University
of Indonesia and at the Ministry of Law and Human Rights. He is a
Fellow of the Chartered Institute of Arbitrators.

Mr. Emir Nurmansyah has worked with ABNR since 1989 and has
been a partner since 1 January 1997. He graduated from the Faculty
of Law, University of Indonesia in 1989, majoring in Economic Law.
In 1993, he earned an LL.M. degree from the Faculty of Law at Bond
University in Australia, majoring in International Transactions.
Emir has, since 1993, dealt with a large number of transactions
involving privatisation, corporate restructuring, and project and debt
financing. He has been involved in most of the restructuring projects
in which ABNR is involved; both as a member, and as the leader, of
the ABNR team. He has also acted as the advisor of IBRA in several
restructuring and asset disposal projects.

Ali Budiardjo, Nugroho, Reksodiputro, usually abbreviated to ABNR, was established in Jakarta in 1967 as a partnership of legal
consultants in Indonesian business law. The firm is one of Indonesias largest independent full-service law firms. The commitment
we make to clients is to provide a broad-based, personalised service from top quality teams of lawyers with international experience
that includes groundbreaking deals and projects. ABNRs reputation has been recognised around the world by independent
industry surveys and law firm guides. ABNR was selected, based on its high level of integrity and professionalism, to be the
sole Indonesian member of the worlds largest law firm association, Lex Mundi, and the prestigious Pacific Rim Advisory Council



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