International Conference on Construction Technology & Innovation (INCONIN2019),

Indonesia Convention Exhibition IE – BSD City 12 March 2019

Economic and Financial Feasibility Study of Airport in The

Mentawai Island Regency
N. Harwin1 and Z. Sriyolja1 M.S. Abdul Rahman2
1. Post Graduated Student of Civil Engineering Faculty, University Teknologi Malaysia, 81310 Johor Bahru, Johor,
Malaysia
2. UTM Construction Research Centre, Institute for Smart Infrastructure and Innovative Construction, School of Civil
Engineering, Faculty of Engineering, University Teknologi Malaysia, 81310 Johor Bahru, Johor, Malaysia
Corresponding author: win.pdg@gmail.com and sriyolja1991@graduate.utm.my

Abstract- Mentawai Islands Regency has a unique tourist attraction

Mentawai Islands Regency has its own tourist attraction
for world surfers and was declared as the second best wave
after Hawaii. White sand beaches, endemic animals, the oldest
tattoos are Mentawai's mainstay for tourism. Limited
transportation was one reason for the slow growth of tourism
in Mentawai. The existing modes of ship transportation are
felt to be inadequate for international tourist destinations. The
Mentawai Islands Regency was declared to have a big
probability for tsunamis and earthquakes disaster. In addition,
it was also stated as a 3T (lagging, remote, outermost) area
that needed infrastructure. The construction of a new airport is
intended for disaster management and catch up. With the
assumption of development in disaster-prone areas and the
unavailability of material sources for airport construction,
construction costs have skyrocketed to 760 billion, operational
costs are estimated at 6.7 billion per year, there was no
supporting factors such as mining, plantations, industry,
making airport development not attracted by investors. With
the reverse approach, the economic feasibility of airports is
done with the target of visits not forecasting. The target of the
visit is made a basic benchmark for SEZ managers in building
and operating.
. the plan to become a special economic zone (SEZ), the need
Keywords—component; Earthquake, Tsunami, New Airport,
Economy, Finance, Mentawai Island District;
I. INTRODUCTION
The Mentawai Islands Regency that located west of West
Sumatra province is declared to have a big probability for
tsunamis and earthquakes disaster [1]. In addition, Mentawai
island regency is also declared as 3T areas (left behind,
remote, outermost) [2]. To catch up and manage disaster,
infrastructure is needed, one of which is airport [3]. In line
with that, the transportation minister's policy of the Republic
of Indonesia is prioritizing the construction of new airports in
disaster-prone areas. This is intended as part of disaster
management. Where, the airport must be landed by a type of
Hercules C-130 aircraft in the context of evacuation and aid
distribution [4].
that have not own by many other regions. Mentawai get the
nickname "surge" for world surfers. Existing waves are
expressed as the second best wave in the world [5]. White
sand beaches, endemic animals, the oldest tattoos are
Mentawai's mainstay for tourism. Limited transportations are
one of the factors causing the slow growth of tourism in the
Mentawai [6]. Modes of ship transportation with a travel time
of 8 hours and affected by the weather at sea, are less
supportive of tourism on a foreign scale [7].
The Mentawai population in 2018 is 63.3 thousand people
with a population growth of 1.97-2.21% per year, the growth
of sea transportation is 15.51% -16.6% per year, the GDP of
the agricultural sector is 56.35% in 2016 [8], unable to support
airport operations [9]. Tourism is something that can be relied
upon to offer.
The development of integrated tourism areas that have
been developed in several places in Indonesia is an inspiration
for the regency government to also develop integrated tourism
areas, which are more specifically called tourism-specific
economic zones [10].
Tourism area development is inseparable from the
existence of the airport, for tourist access in and out [11]. With
for new airports is increasingly apparent. The old airport,
which is located on Sipora Island, cannot support SEZ, in
addition to only small pioneer class airports, access from the
SEZ area to the airport only can be reached by less convenient
sea access. SEZ must provide land for airports.
In order to have a synergy of mutual support between the
tourism area and the airport, it is necessary to do a study in the
form of feasibility, both airport feasibility and SEZ.
Approaches are made to analyze feasibility. Regional
economic growth, population growth, ship passenger growth is
something that must be analyzed [12]. Weak economic factors
in the region, small population growth and the growth of
passenger ships are also small, making feasibility far from
expectations. Finally it was proposed a way in which the
minimum number of aircraft passengers to obtain financial
feasibility. The minimum number of aircraft passengers is a
minimal target of tourist areas to bring people to special
economic tourism areas. So that airports can fulfill their
 International Conference on Construction Technology & Innovation (INCONIN2019),
Indonesia Convention Exhibition IE – BSD City 12 March 2019

operational functions can also operate independently without TABLE.1

government subsidies [13]. Growth Passengers on the Mentawai Fast ship to Mentawai in
2015-2017
II. LITERATURE REVIEW
Passengers Growth Rate (%)
Transportation
A. Special Economic Zones 2015 2016 2017 2015-2016 2016-2017
The Mentawai Islands regency has been designated as a MV Mentawai Fast 73,373 86,940 98,928 18.49 12.12
major tourist destination among 52 regions in Indonesia,
Source : MV. Mentawai Fast, 2018
therefore integrated development and tourism sector
development policies need to be developed and managed more
professionally. The Special Economic Zone is set on the island PT. ASDP Fery Indonesia also operates 2 (two) ships to
of Siberut precisely in the southwestern Siberut sub-district. Siberut Island. With the operation of the fast-paced fast ship,
The Special Economic Zone consists of one zone or several ferry passengers have decreased since 2015
zones including Tourism. The Mentawai Special Economic .
Zone takes up an area of 2,638 Ha, 300 ha is intended for TABLE. 2
airports [14,15]. Passengers on ship to Siberut Island
B. Airport
Passengers Growth Rate (%)
Airports are built with several objectives including, as a Track
2013 2014 2015 2016 2017 2013-2014 2014-2015 2015-2016 2016-2017

mode of transportation, economic development of the area Padang - Siberut (round trip)
Padang - Sikabaluan (round trip)
26,162 28,508 12,864
6,994
10,639
7,510
13,593
5,108
8.97 (54.88) (17.30)
7.38
27.77
(31.98)
around Bandar [16,17], supporting tourism [11], and disaster Source : PT. ASDP, Padang, 2018
mitigation [4]. Airport development must be supported by the
regional economy [12]. A. Population
Some important facilities needed by an airport such as run Population and population growth rate by Regency / City
way, taxiways, aprons, control towers, passenger terminals, in Mentawai Island District, 2015,2016 and 2017.
cargo, office and power house terminals [18,19,20].Revenue
forecasts for airports are obtained from airport operations. TABLE. 3
Aeronautical Revenue Fee refers to the decision of the Residents of the district of the Mentawai Islands 2013 – 2017
Directors of PT. (Persero) AngkasaPura II No. KEP.302 / KM
/ 10 / APII-2005 concerning air side services such as landing Population (People) Growth Rate (%)
Regency
fees, route fees and aircraft support facilities. Aeronautical 2015 2016 2017 2015-2016 2016-2017
income costs are assumed to increase by 10% every five years. Kep. Mentawai 85,295 86,981 88,692 1.98 1.97
C. Airport Site Conditions
Source : BPS Kep. Mentawai 2018
West Siberut District is located between 1 27 '36' - 1 57
'00' South Latitude and between 98 45 '00' - 99 19 '48' East
B. Regional economy
Longitude. Geographically, Siberut Barat Subdistrict is in the
The economic structure of the Mentawai Islands Regency
Mentawai Islands Regency Area with an area of 93,355.95 Ha
based on data on the Gross Regional Domestic Product
which is directly adjacent to the sea area.SiberutDaya sub-
(GRDP) in 2018 according to the business field is still
district has a slope location that varies from the lowest to the
dominated by the Agriculture, Forestry and Fisheries business
highest. The biggest area is the 8-15% slope with an area of
field. This can be seen from the magnitude of the role of the
12399.23 Ha:
field of this business towards the formation of the Mentawai
Siberut Barat Daya District has tsunami prone areas
Islands GRDP, then followed by the Big Trade and ceramics
located along the coastline of Siberut Island and other islands
business field; Car and Motorcycle Repair, Construction
in the Siberut Barat District. The location of the Mentawai
business field and business field Transportation and
Islands Regency, which is close to the Indo-Australian Plate or
Warehousing and other business fields. This is also supported
Sunda Plate, makes the Mentawai Islands Regency, including
by land use in the Southwest Siberut District which is also
the Regency of Southwest Siberut, an area prone to tectonic
dominated by forest land [7].
earthquakes.
D. Condition of mode of transportation to Mentawai.
III. RESEARCH METHODOLOGY
The main sea transportation modes from Sumatra to
Mentawai are served by MV vessels. Mentawai Fast and
The method of assessing the financial and economic
ASDP by ferry. The table below shows the number of
feasibility of airport development is carried out using several
passengers and passenger growth [21] MV vessels. Mentawai
methods, namely [22]:
Fast which began operating in 2015.
 International Conference on Construction Technology & Innovation (INCONIN2019),
Indonesia Convention Exhibition IE – BSD City 12 March 2019

1. Net Present Value (NPV)

The Net Present Value is the current net profit - in the TABLE 4
form of the value of money - from an investment. Net COST OF DEVELOPMENT
profit means that all revenues or benefits obtained are
reduced by all costs incurred. With a certain interest COST
No. DESCRIPTION
rate, all benefits obtained and all costs incurred (Rp.)
during the period reviewed are converted to current 1 Initial Work 358,660,560,000
values. 2 Airside Area 169,376,900,000
2. Benefit-Cost Ratio Analysis (B/C) 3 Landside Area 168,940,000,000
4 Navigation and Telecommunication Equipment 35,000,000,000
Benefit Cost Ratio (BCR) is the value of the 5 Electrical Mechanical Work 28,750,000,000
comparison between all benefits or receipts obtained Total Development Costs 760,727,460,000
from an investment and the costs incurred for the
investment. With a certain interest rate, all benefits
are obtained and costs incurred during the period A. Income and Expenditure Cost
reviewed are converted to a particular year which is Revenue forecasts for airports are obtained from airport
generally the initial investment year and then operations. Aeronautical Income Fees are adjusted according
compared to the decision of the Directors of PT. (Persero) Angkasa Pura
3. Pay-Back Period Method II No. KEP.302 / KM / 10 / APII-2005 concerning air side
Payback Period is the period or number of years services. Air side services come from total service revenues
needed to return the investment value that has been for aircraft, passengers and cargo. Aircraft service revenues
issued. The Payback Period in Indonesian can be are obtained from Landing Fees, Route Fees and Aircraft
referred to as the Capital Return Period Support Facilities. Aeronautical income costs are assumed to
4. Internal Rate of Return (IRR) increase by 10% every five years.
Internal Rate of Return (IRR) is a method of Non-Aeronautical Income Non-aeronautical income for
calculating investment by calculating the interest rate advertising, building rental, building rental, parking, VIP and
which equates the present value of investment with cargo and postal services. The increase in cargo is only 20%
the present value of future cash receipts per year.

IV. RESULT AND DISCUSSION TABLE 5

Income and Expenditure Cost
From the data obtained for the needs of an airport
Year To Year Auronautical Non Auronautical TOTAL COST OPERATIONAL
development, calculations are made on the cost of 0
development. Development in disaster-prone areas has its own 1
2 2022 6,609,641,562 2,739,659,730 9,349,301,292 6,750,000,000
characteristics. The basic materials of building materials such 3 2023 7,931,596,040 3,046,521,657 10,978,117,697 7,460,000,000
as sand, gravel are not around the location, must be brought 4 2024 9,517,915,248 3,390,973,621 12,908,888,869 9,745,200,000
5 2025 11,421,498,298 3,778,181,260 15,199,679,558 10,793,624,000
from the island of Sumatra, making construction costs high. 6 2026 19,819,307,011 4,294,914,000 24,114,221,011 11,955,758,880
Calculation of development costs, operational costs obtained 7 2027 26,161,485,255 4,800,067,197 30,961,552,452 13,244,039,946
8 2028 32,701,856,568 5,406,652,043 38,108,508,611 14,672,273,739
from applicable assumptions, are used to analyze the 9 2029 40,877,320,710 6,106,577,849 46,983,898,559 16,255,790,488
feasibility of development. The assumption of the number of 10 2030 51,096,650,888 6,917,428,023 58,014,078,911 18,011,613,636
11 2031 63,870,813,610 7,860,612,672 71,731,426,282 19,958,648,392
airplane passengers at the airport is used as a target visit for 12 2032 87,822,368,714 8,973,305,400 96,795,674,114 22,117,891,430
special economic tourism areas, so that airports and tourism 13 2033 114,169,079,328 10,401,094,625 124,570,173,952 24,512,664,155
14 2034 148,419,803,126 12,132,785,414 160,552,588,540 27,168,872,183
areas can operate perfectly. 15 2035 192,945,744,064 14,247,255,815 207,192,999,879 30,115,294,007
16 2036 250,829,467,283 16,845,829,628 267,675,296,911 33,383,902,167
17 2037 358,686,138,214 20,075,330,776 378,761,468,990 37,010,220,593
A. Development Costs 18 2038 448,357,672,768 23,571,537,298 471,929,210,066 41,033,722,248
19 2039 560,447,090,960 27,791,824,423 588,238,915,383 45,498,271,619
The ideal runway length for international flights is 2225 20 2040 700,558,863,700 32,902,389,954 733,461,253,655 50,452,617,184
m, with a width of 45m. From the topography at the location. 21 2041 875,698,579,625 39,109,512,314 914,808,091,939 55,950,939,515
22 2042 1,204,085,546,985 46,693,921,328 1,250,779,468,312 62,053,461,352
23 2043 1,505,106,933,731 55,927,018,008 1,561,033,951,739 68,827,126,720
24 2044 1,881,383,667,163 67,227,759,843 1,948,611,427,007 76,346,356,932
25 2045 2,351,729,583,954 81,089,255,658 2,432,818,839,612 84,693,892,270

B. Financial Analysis
Based on the growth projections of air transport
projections for 2022, then feasibility is calculated economic
and financial obtained as follows:
 Net Present Value (NPV)
 International Conference on Construction Technology & Innovation (INCONIN2019),
Indonesia Convention Exhibition IE – BSD City 12 March 2019

From the results of financial analysis calculations for new TABLE.7

airports in the Mentawai Islands Regency, the NPV value Target Operational and Visitour
of Rp. 1,421,058,901,379.00 for a discount factor of
Flight Cargo
8.25%, NPV> 0 = feasible. To
Year
Year visitors
Domestic International Domestik International Post
 Net Benefit Cost Ratio (Net B / C) 1 -
2 2022 69,551 368 - 222,698 970
This coefficient shows how many times the benefits will be 3 2023 83,461 442 - 239,777 972
derived from the costs incurred. The calculation results 4 2024 100,153 530 - 258,165 974
5 2025 120,184 636 - 277,963 976
show Net B / C of 2.12 for a discount factor of 8.25%, Net 6 2026 144,221 572 191 299,280 89,784 978
B / c ≥ 1 = feasible. 7 2027 173,065 687 229 322,231 96,669 980
8 2028 216,331 858 286 346,943 104,083 982
 Internal Rate of Return (IRR) 9 2029 270,414 1,073 358 373,549 112,065 984
From the calculation results show that the IRR for Peipei 10 2030 338,018 1,341 447 402,196 120,659 986
11 2031 422,522 1,677 559 433,040 129,912 988
Airport gets IRR 13.58. IRR> social factor (8.25%) = 12 2032 528,153 2,096 699 466,249 139,875 990
feasible. 13 2033 686,599 2,725 908 502,005 150,602 992
14 2034 892,578 3,542 1,181 540,503 162,151 994
 Payback period 15 2035 1,160,352 4,605 1,535 581,954 174,586 996
From the calculation results obtained 21.31 years, for the 16 2036 1,508,458 5,986 1,995 626,583 187,975 998
17 2037 1,960,995 7,782 2,594 674,634 202,390 1,000
8.25% discount factor. 18 2038 2,451,243 9,727 3,242 726,371 217,911 1,002
C. Economic Analysis 19
20
2039 3,064,054
2040 3,830,068
12,159
15,199
4,053
5,066
782,075
842,052
234,623
252,615
1,004
1,006
As a result of the construction of airports, there are 21 2041 4,787,585 18,998 6,333 906,627 271,988 1,008
22 2042 5,984,481 23,748 7,916 976,155 292,847 1,010
increased opportunities to work in airport construction, job 23 2043 7,480,601 29,685 9,895 1,051,015 315,305 1,012
opportunities at operational airports and their supporters, 24
25
2044 9,350,752
2045 11,688,440
37,106
46,383
12,369 1,131,616
15,461 1,218,398
339,485
365,519
1,014
1,016
increased demand for restaurants, increased need for washing
clothes, increased car wash needs, increased purchasing power
of processed products such as fish and vegetables increased
demand for property, increased demand for transportation. REFERENCES
[1]. Sumari, A. D. W., Nugroho, S. P., & Addin, T. N.
TABLE 6 (2019). Pengurangan Risiko Bencana Gempa Bumi-
Bennefit Economic Tsunami Di Pangkalan Tni Au Padang Akibat
Megathrust Mentawai. In Jurnal Pertahanan & Bela
No Bennefit Economic Cost (Rp) Negara (Vol. 6). https://doi.org/10.33172/jpbh.v6i1.304
1 Increased Job Opportunities 15,000,000 [2]. Republik Indonesia. 2015. Peraturan Presiden RI
2 Increased Income During Develompent 8,100,000,000 Nomor 131 Tahun 2015 tentang Penetapan Daerah
3 Increased Selling Price of Community Product 870,000,000 Tertinggal. Presiden RI. Jakarta
4 Generate Property 600,000,000 [3]. Button, K., Doh, S., & Yuan, J. (2010). The role of
5 Generating Other Economies 5,310,000,000 small airports in economic development. Journal of
Total every year 14,895,000,000 Airport Management, 4(2), 125–136.
[4]. Republik Indonesia. (2013). Peraturan Menteri
In line with the increase in people's income due to the Perhubungan RI Nomor PM.69 Tahun 2013 tentang
construction of airports, there are also a number of costs that Tatanan Bandar Udara Nasional, Menteri Perhubungan
must be borne by the community, costs of deterioration due to Ri. Jakarta.
dust during construction, costs due to air pollution and noise, [5]. Ponting, J., McDonald, M., & Wearing, S. (2005). De-
costs due to the addition of waste, costs due to land hunting Constructing Wonderland: Surfing Tourism in the
silt bay. Mentawai Islands, Indonesia. Loisir et Societe, 28(1),
From economic analysis, the economic sector gets an 141–162.
NPV of Rp. 157,295,056,251.00. This means that people's https://doi.org/10.1080/07053436.2005.10707674
income has increased by Rp. 1. 164,039,680,317.00 for 25 [6]. Transport, S. (2018). Advances in Engineering
years. Research (AER), volume 147 Conference on Global
Research on Sustainable Transport (GROST 2017).
D. Target Operational Visitor 147(Grost 2017), 642–649.
An analysis of the costs of development, operational costs [7]. Spasojevic,B, Lohmanng, Scott N, Air transport and
and income has resulted in the values of financial and tourism – a systematic literature review (2000–2014),
economic feasibility. The number of visits that form the basis Griffith University , Australia, 2017, ISSN: 1368-3500
of calculating income is the target of arrival for tourist areas in Journal homepage:
serving and promoting, so that airports and tourist areas can
http://www.tandfonline.com/loi/rcit20
operate properly.
[8]. Badan Pusat Statistik, Mentawai (2018). Statistik
Daerah Kepulauan Mentawai.
 International Conference on Construction Technology & Innovation (INCONIN2019),
Indonesia Convention Exhibition IE – BSD City 12 March 2019

[9]. Cui, Q., & Kuang, H. (2014). Important influencing [21]. Shaban, A. (2018). Profitability and Financial
factors analysis of airport sustainable development Performance Indicators in U . S . Airports - A
capacity: The case of China. Journal of Airline and Preliminary Investigation.
Airport Management, 3(1), 31–47.
[22]. Rajaratnam, Y., Hardjasaputra, H., & Girianna, M.
https://doi.org/10.3926/jairm.17
[10]. Bupati kepulauan mentawai provinsi sumatera barat (2006). Studi kelayakan ekonomi pengembangan
(2015), Peraturan Daerah Kabupaten Kepulauan Bandara Udara Internasional Minangkabau (BIM).
Mentawai Nomor 3 tahun 2015 tentang Rencana Jurnal Teknik Sipil, 3(2), 81–91.
Tataruang Wilayah Kabupaten Kepulauan Mentawai [23]. Rangkuty, F, Study Kelayakan Bisnis & Investasi,
Tahun 2015 – 2035 Jakarta, PT.Gramedia Pustaka Utama, 2012
[11]. Ricardianto, I. P., Djajaputra, D. G., & Martono, P. D. [24]. Soeharto, I, Study Kelayakan Proyek Industri, 2002,
(2017). Air Transport and Tourism in Indonesia. IOSR PT.Erlangga, x2002
Journal of Applied Chemistry, 10(05), 01–19.
https://doi.org/10.9790/5736-1005010119
[12]. Sheard, N. (2019). Airport Size and Urban Growth.
Economica, 86(342), 300–335.
https://doi.org/10.1111/ecca.12262
[13]. Aid, I. (2012). Shannon Airport Feasibility Study
Commissioned by Irish Aid, (September), 0–
38.www.everywheresevices.org
[14]. Schaar, D., & Sherry, L. (2010). Analysis of airport
stakeholders. 2010 Integrated Communications,
Navigation, and Surveillance Conference Proceedings,
ICNS 2010, (June 2010).
https://doi.org/10.1109/ICNSURV.2010.5503233
[15]. Mohd Isa, N. A., Abdul Hamid, N., & Leong, T. P.
(2016). A Stakeholder Analysis of the klia2 Airport
Terminal Project. Environment-Behaviour Proceedings
Journal, 1(3), 281. https://doi.org/10.21834/e-
bpj.v1i3.372
[16]. Blonigen, B. A., & Cristea, A. D. (2012). Airports and
Urban Growth: Evidence from a Quasi-Natural Policy
Experiment. SSRN Electronic Journal,
(July).https://doi.org/10.2139/ssrn. 2118956
[17]. Breidenbach, P. (2015). Ready for Take-Off? The
Economic Effects of Regional Airport Expansion.
Germany. Ruhr Economic Paper 549.
[18]. Ranjith, V., Sumathi, N., & Ashvin, V. S. (2018).
Comparative Study of Landside Facilities in Airports.
(April).
[19]. Dwi, E. (2017). Perencanaan Pengembangan Runway
dan Taxiway Bandar Udara Juwata – Tarakan. Warta
Ardhia, 42(4), 203.
https://doi.org/10.25104/wa.v42i4.250.203-208
[20]. Surya, P. (2016). Studi Proyeksi Kebutuhan Fasilitas Sisi
Darat Dan Pengembangan Kota Bandar Udara Ahmad
Yani Di Kota Semarang. Jurnal Pembangunan Wilayah
Dan Kota, 12(4), 418–428.