“The Enactment of the Implementing Regulation of Omnibus Law on Aviation Sector”
Indonesian Government has finally issued 49 implementing regulations to the Law Number 11 of 2020 on Job Creation (the “Omnibus Law”) on 2 February 2021. This implementing regulations consist of 45 Government Regulations and 4 Presidential Regulations. One of the implementing regulation of Omnibus Law is Government Regulation No. 32 of 2021 concerning implementing of aviation sector (“GR No. 32/2021”). Omnibus Law has amended and/or removed several provisions under Law Number 1 of 2009 (“Aviation Law”) and GR No. 32/2021 provides more detailed regulation.
This client alert will elaborate important point of GR No. 32/2021 particularly regarding the substantive changes under GR No. 32/2021 in relation to aircraft licensing, aircraft deregistration and minimum aircraft requirement.
IMPORTANT NOTES ON GR NO. 32/2021
Aircraft Licensing in Indonesia
By the enactment of Omnibus Law, certain provisions and requirements to obtain several aircraft licensing in Indonesia which previously regulated under Aviation law have been removed, among other the technical and/or administrative requirements to obtain: (i) Certificate for Aircraft Manufacturer (Article 19); (ii) Certificate of Registration; (iii) Certificate of Airworthiness; (iv) Air Operator Certificate; (v) Operating Certificate; (vi) Certificate of Aircraft Maintenance Organization; (vii) License for Aircraft Personnel; (viii) License for Navigation Personnel. GR No. 32/21 now regulates the requirements to obtain such licenses. Some of the requirements remain the same with what previously regulated under Aviation Law, which are the requirements to obtain (i) Certificate of Registration and (ii) Certificate of Airworthiness. While some of the requirements for other licenses are amended by GR No. 32/2021.
Below are the amendments of certain requirements made by GR No. 32/21:
1. Certificate of Aircraft Manufacturer
There is 1 (one) additional requirement to obtain Certificate of Aircraft Manufacturer which previously not regulated under Aviation Law, which is safety management system guideline (Article 11 paragraph 2g). The other requirements remain the same with what previously regulated under Aviation Law.
2. Air Operator Certificate
There is 1 (one) additional requirement to obtain Air Operator Certificate which previously not regulated under Aviation Law, which is aircraft operator security programme (Article 24j). Further, GR 32/2021 also remove some of the requirements which previously regulated under Aviation Law, i.e requirements to (i) own and/or possess aircraft operating facility; (ii) own and/or possess adequate spare part supply; (iii) own aircraft operating procedure; and (iv) own facility and guideline for education and/or company training manuals.
3. Operating Certificate
There is 1 (one) additional requirement to obtain Operating Certificate which previously not regulated under Aviation Law, which is aircraft operator security programme which refers to national aviation safety programme (Article 24f).
4. Certificate of Aircraft Maintenance Organization
There are 2 (two) additional requirements to obtain Certificate of Aircraft Maintenance Organization which previously not regulated under Aviation Law, which are (i) Business Identification Number (Nomor Induk Berusaha) and (ii) management who is responsible for maintenance activities of Aircraft, Aircraft engines, Aircraft propellers and/ or its components and has passed the fit and proper test. The other requirements in Aviation Law remain unchanged.
Article 109 of the Omnibus Law has removed the administrative requirements to obtain Commercial Air Transportation Business Permit/Izin Usaha Angkutan Udara Niaga. However, GR No. 32/2021 does not regulate the requirements to obtain such business license while business license is one of the important aircraft licensing, especially for the operator to conduct airline business in Indonesia. In the meantime, Minister of Transportation Regulation Number KM 25 of 2008 will still prevail in the absence of such requirements. This has been confirmed by Minister of Transportation officer.
Minimum Aircraft Requirement
Previously, under the Omnibus Law, the minimum aircraft requirement which shall be owned and possessed by operator no longer specified. Omnibus Law only mentioned the obligation of operator to own and possess aircraft in certain number. GR No. 32/2021 now specifies the number of aircraft which shall be owned and possessed by operator, which is different with what previously regulated under Aviation Law. Under GR No. 32/2021, the operator requires to (i) own minimum 1 (one) and possess minimum 2 (two) aircraft for scheduled commercial air transportation; (ii) own minimum one (1) aircraft and other aircraft in form of possession for non-scheduled commercial air transportation; and (iii) own minimum one (1) aircraft and other aircraft in form of possession for cargo commercial air transportation. This new requirement regarding minimum aircraft requirement will make it easier for airlines operator to enter into aviation market in Indonesia.
Deregistration of Aircraft
GR No. 32/2021 states that one of the reasons for the deregistration of aircraft by owner or its proxy is ‘a final and binding court judgement following a lease event of default’ (Article 15 Paragraph a7 of GR No. 32/2021). The interesting issue here is that if we read Article 29 paragraph 17 of Aviation Law, a final and binding court judgement is not required and this provision is not removed nor amended by the Omnibus Law, which therefore should remain in effect.
We understand that there is a conflict between Aviation Law and GR No. 32/2021 which lead into a question as to which provision will prevail. However, since in Indonesia, a law has higher hierarchy than a government regulation, then we can conclude that the relevant provision under Aviation Law will prevail and therefore, a final binding court judgement is not required. We also have confirmed this verbally with the Indonesian DGCA and law department of Ministry of Transportation, to which they acknowledged that there was an error in the drafting of such GR No. 32/2021 and the provision under Aviation Law (Article 29) prevails. They informed us that such provision in GR No. 32/2021 will be revised as soon as possible.
It is stated under GR No. 32/2021 that the guidelines and procedures of aircraft licensing will be further regulated under Minister of Transportation Regulation. Therefore, even though the implementing regulation of Omnibus Law has come into effect and has regulated more detailed requirements for aircraft licensing in Indonesia, we shall wait for the Minister of Transportation Regulation to be issued as there will be more detailed and specific regulation under Minister of Transportation Regulation which need to be observed.
We hope the above explanation is sufficient.
Please note that the information contained in this alert should be only used as a general guideline with respect to the subject hereof and may not contain legal advice for your specific cases. The information herein should not be used or relied upon in regard to any particular facts or circumstances without seeking legal advice from us. We will not be liable nor be responsible for any consequences, damages or other similar forms which may be suffered by any party who had used or relied upon this alert.
If you require further information on the new regulation, please do not hesitate to contact:
Nurjadin Sumono Mulyadi & Partners
Vera Noviani Harwanto
Annysa Ayu Putri
Andika Immanuel Simatupang