Reconstructing the National Aviation Ecosystem Through a Shared Economy Model

INTRODUCTION

The global aviation industry’s transformation over the last two decades demonstrates that aviation is no longer understood merely as a transport sector, but as part of an ecosystem involving mobility, investment, regional connectivity, and strategic economic development. In this context, the concept of Fractional Aircraft Ownership (FAO) is emerging as an innovative model that combines collective aircraft ownership with professional operational management based on air mobility services. This model allows multiple parties to hold a proportion of ownership in a single aircraft unit with usage rights based on specific allocated flight hours (Button, 2008).

In many developed nations, FAO has become an essential part of the business and general aviation industries. Companies such as NetJets, Flexjet, and Wheels Up demonstrate that aircraft ownership no longer needs to be individual and exclusive, but can be managed collectively with much higher utilisation efficiency (Wensveen, 2018). This concept arose from the need for flexible, fast, and efficient air mobility, particularly for regions with limited regular commercial flight connectivity.

For Indonesia, as the world’s largest archipelagic nation, FAO holds immense strategic relevance. Indonesia’s geographical character, consisting of thousands of islands, creates a need for air connectivity that cannot always be optimally met by conventional commercial airlines. Many economically productive regions still face limited air transport access due to low passenger density, limited airport infrastructure, or high operational costs for regional routes (Ministry of Transportation of the Republic of An Indonesia, 2023).

From a national development perspective, FAO can be viewed as an alternative model to democratise access to air infrastructure. This system opens opportunities for collective aircraft ownership and utilisation by local governments, regional hospitals, industrial zones, cooperatives, the tourism sector, and regional business consortiums. Consequently, aircraft would no longer be positioned as an exclusive symbol of luxury, but as an instrument for economic productivity and national connectivity.

However, the implementation of FAO in Indonesia cannot be separated from various multi-dimensional challenges. From a technical and operational perspective, this system requires high safety standards, professional operational oversight, digital technology integration, and the readiness of the Maintenance, Repair, and Overhaul (MRO) industry. From a legal perspective, Indonesia still faces a regulatory vacuum regarding collective aircraft ownership, investor protection, and the division of operational responsibilities. Meanwhile, from a financial perspective, the success of FAO depends heavily on business model efficiency, optimisation of fleet utilisation, and integration with the national financial system.

This paper attempts to analyse the implementation of FAO in Indonesia through a multi-perspective approach covering technical-operational, legal-regulatory, and financial and business model aspects. A multidisciplinary approach is necessary because FAO is not merely an aircraft ownership model, but part of the transformation of a modern aviation ecosystem that touches upon safety, investment governance, digitalisation, and national development.

TECHNICAL AND OPERATIONAL PERSPECTIVE

From a technical perspective, implementing FAO in Indonesia requires a major transformation of the national civil aviation management paradigm. This system cannot be operated using a traditional private aviation approach because its operational character is far more complex. High aircraft utilisation rates, the involvement of multiple shareholders, and the need for digital integration mean that FAO more closely resembles the operational character of a small airline than ordinary private aircraft ownership.

Aircraft Ownership and Registration Structure

One of the most fundamental aspects of FAO implementation is the ownership structure of aircraft assets. In international practice, aircraft ownership is usually placed under a specific legal entity in the form of a Special Purpose Vehicle (SPV). This model allows for a clear separation between aircraft assets, company liabilities, and investment risks (Doganis, 2019).

In the Indonesian context, the use of SPVs is highly relevant as it can create legal certainty regarding the collective ownership of aircraft. Investors do not purchase aircraft directly, but rather purchase shares in a company that serves as the legal owner of the aircraft in the national registry. This structure provides efficiency in financing, taxation, and regulatory oversight.

The SPV approach is also vital for protecting investors from the complex operational risks inherent in the aviation industry. Aircraft are high-value assets with significant risk exposure, ranging from accidents and grounded aircraft to fluctuations in the global aviation market value. Therefore, asset separation through an SPV is a crucial part of international aviation finance practices (Wensveen, 2018).

However, the greatest challenge in Indonesia lies in the lack of specific regulations regarding collective aircraft ownership. The national registration system is still oriented towards single ownership by airlines or individuals. As a result, the implementation of FAO faces potential legal uncertainty regarding usage rights, operational responsibilities, and the mechanism for transferring shares.

Operational Control and Safety Governance

In the aviation industry, safety is always the top priority (the ‘safety first’ principle). Therefore, all FAO operations must be under an operator holding an Air Operator Certificate (AOC). Shareholders must not take over flight operational control, even if they hold rights…