This opinion piece is a comparative analysis of the legal frameworks that underpins Public Service Obligations (PSOs) in aviation between Australia and indonesia. While Australia relies on clear legislative mandates and regulatory oversight to guarantee equitable air access for remote communities, Indonesia takes a more opposite approach, grounded in executive discretion and policy rather than enforceable law. The following piece argues for a rights-based, codified model in Indonesia, supported by independent oversight and community-informed planning. In this instance, legal reform is necessary to enhance transparency, accountability, and long-term sustainability in delivering essential air services across the Indonesian archipelago.

Introduction

In geographically vast countries like Australia and Indonesia, aviation plays a vital role in ensuring remote communities can access essential services. However, these regions often face challenges—many air routes are commercially unviable, leaving isolated populations underserved. To bridge this gap, both countries use Public Service Obligations (PSOs), or government-backed flights designed to maintain basic connectivity. Yet the legal and policy frameworks behind these programs differ greatly. Australia’s PSO system—anchored by the Remote Air Service Subsidy Scheme (RASS) and legislation like the Airports Act 1996 and Civil Aviation Act 1988—ensures transparency and legal accountability (Australian Government, 2023). Indonesia’s perintis (pioneer) routes, by contrast, rely heavily on executive decrees and fluctuating budgets, offering limited enforceability or community input (DGCA Indonesia, 2022). This piece argues that Indonesia would benefit from codifying its PSO model in law, taking cues from Australia to deliver more reliable, equitable air services.

In aviation, Public Service Obligations (PSOs) refers to state-mandated air services provided on routes that are not commercially viable but are essential for regional connectivity, social inclusion and economic development. This is recognised in international legal frameworks such as ICAO Doc 9587 (ICAO, 2012). This model was further codified by The European Union in Regulation (EC) No 1008/2008, allowing member states to impose PSOs on specific routes to ensure accessibility (European Parliament & Council, 2008). In summary, PSOs are legal mechanisms that allow the governments to subsidise or regulate air services to ensure that no region is left disconnected simply because it isn’t profitable

Airlines operating under this scheme may be required under the governance of the state to operate in specific routes with conditions, such as frequency, capacity and pricing. This is done in exchange for financial compensation, exclusivity rights or preferential licensing. This system walks a fine line between free-market aviation and the state’s responsibility to ensure equitable access. PSOs are typically enforced by states through legislation, binding contracts or licensing conditions that are overseen by national civil aviation authorities. The formalisation of these obligations by the government plays a critical role in preventing market failures from disproportionately affected isolated communities.

Australia’s Legal Framework

Australia’s approach in supporting air services in remote regions is legally bounded in a structured network of legislation and government-administered programs. Airports Act 1996 (Cth) and the Civil Aviation Act 1988 (Cth) are two legislations, central to this structure, empowering the government to regulate air service providers and intervene in unprofitable but socially critical markets.

A key component, the Remote Air Services Subsidy Scheme (RASS), falls under the Regional Aviation Access Program and is managed by the Department of Infrastructure. This scheme requires the enforceability of strict eligibility, operational criteria, including minimum service frequency, performance auditing and price controls to prevent exploitation. If selected, operators are contracted to serve remote communities with limited or no road access year-round.provide regular, scheduled services to remote communities that lack in year-round road access.

Complementing this, the Australian Competition and Consumer Commission (ACCC) monitors regional airfares and accessibility. Its reports track affordability and service levels to ensure subsidy goals are met and consumers are protected (ACCC, 2022). Additionally, community feedback mechanisms are embedded into the regulatory reports, allowing residents of remote regions and local councils to report any inconveniences, deficiencies or request route adjustments.

Australia’s legal model ultimately offers a transparent, enforceable system that effectively balances economic viability with public interest and equity.

Indonesia’s Approach

In contrast, Indonesia’s approach to ensuring air connectivity for remote and underserved regions is established through the “Perintis” (Pioneer) routes program. Unlike Australia through its legally codified Remote Air Services Subsidy Scheme, Indonesia’s pioneer routes are governed largely by ministerial decrees (Keputusan Menteri Perhubungan/Kepmenhub), such as PM 66/2020, rather than legislative instruments. These decrees outline the criteria and operational mechanism for subsidised flights to areas that are deemed economically not practical but are socially necessary. As such, these decrees lack the protection under comprehensive legislative instruments.

The program is regulated by the Directorate General of Civil Aviation (DGCA) under the Ministry of Transportation and is funded annually through the state budget (Anggaran Pendapatan dan Belanja Negara, APBN). While the intention behind the decrees to provide equitable access is clear and good, the approach that is taken, relying solely on executive discretion than an enforceable statutory law, will lead to persistent challenges, including inconsistency in service provision, weak contract enforcement and political interference in route allocation and selection of operators.

These systematic issues as a result of this approach are highlighted in recent controversies – several routes facing frequent cancellations, missed flights and unilateral contract termination due to poor oversight and lack of accountability (Tempo, 2023). This goes to show that without a legal backbone, operators will face minimal consequences for non-compliance, leaving affected communities without a recourse. The result comes from a system vulnerable to administrative inefficiencies and inequalities, undermining the very purpose and goal of national air connectivity.

Legal Comparison and Analysis

Indonesia and Australia have adopted markedly different legal approaches to administering subsidised air services, with great implications for regulatory certainty and public accountability. Australia ensures clarity and stability through legislations such as the Airports Act 1996 and binding contracts under the RASS scheme, which enforces service levels, monitors compliance and sanction underperformance. In contrast, Indonesia’s reliance on ministerial decrees and discretionary policy instruments creates a less predictable legal environment.

The accountability for operator breach of contract is more robust in Australia as legal contracts and government audits ensures enforcement. In Indonesia, weak oversight mechanisms often lead to route performance and compliance unchecked. Furthermore, Australia’s system frames remote air service as a public entitlement, whereas Indonesia frames it as a policy benefit—subject to shifting budget priorities.

Australia distinguishes itself in transparency and monitoring, publishing data and encouraging community feedback, while Indonesia’s processes remain opaque and top-down.

Policy Recommendations

To address the issues surrounding the legality and operations of Indonesia’s current approach to Public Service Obligations in aviation, a multi-layered policy reformed is highly recommended.

1. Codify PSOs in Aviation Law

Indonesia must move beyond reliance on ministerial decrees and embed PSOs within its national aviation legislation. This move towards a legislative mandate would provide consistency, transparency and legal enforceability, which the current system is lacking in. The law should clearly define operator responsibilities—including service frequency, quality standards, and pricing controls—along with enforceable penalties for breaches. With inspiration from Australia’s Remote Air Services Subsidy Scheme (RASS), Indonesia will take a big step towards establishing a predictable legal foundation that can protect remote communities and guide operators.

2. Introduce Independent Regulatory Oversight

At present, both policy development and oversight fall under the Directorate General of Civil Aviation (DGCA), creating potential conflicts of interest. Allowing a more independent oversight body to govern – either by enhancing the DGCA autonomy or creating a commission dedicated to rural aviation – can significantly improve contract monitoring, enforce performance standards and reduce political interference in operator selection.

3. Adopt Community-Informed Route Planning

To implement PSOs, remote and indigenous communities must be active participants in determining the services that are needed. Embedding consultation mechanisms within the PSO framework will ensure that services reflect actual needs. Australia’s model –integrating local councils and community feedback into PSO planning offers a valuable precedent.

4. Ensure Cross-Sector Coordination

Aviation connectivity should not stand alone in its own sector. Aviation access must be aligned with broader public services, such as healthcare, education, and emergency response. This can be done through a formal inter-agency collaboration. By linking air access to constitutional rights and public services, Indonesia can elevate remote aviation from a discretionary benefit to legal entitlements.

Collectively, these reforms will allow for accountability in cases of breach of contract by operators, increase legal certainty and transform Indonesia’s aviation PSO system into a more equitable and sustainable framework.

CONCLUSION

Indonesia’s legal framework for Public Service Obligations in aviation lacks the structure, enforceability and community engagement that uphold Australia’s legislative mechanism. Without the codification of obligations and independent oversight, remote communities remain vulnerable to the inconsistent service. With Australia as the leading example, a shift towards a rights-based, legislated model of air access – one that values transparency, strengthens governance, and incorporates community input. Such changes would promote legal certainty, equity and ensure the long-term sustainability of crucial services across Indonesia’s vast archipelago.

REREFENCES 

1. (2023) Remote Air Services Subsidy Scheme (RASS). Australian Government Department of Infrastructure, Transport, Regional Development, Communications and the Available at: https://www.infrastructure.gov.au/infrastructure-transport-vehicles/aviation/regional-remote-aviation/remote-air-services-subsidy (Accessed: 14 April 2025).
2. (1996) Airports Act 1996 (Cth). Commonwealth of Australia Available at: https://legislation.gov.au/C2004A05061/latest (Accessed: 14 April 2025).
3. (1988) Civil Aviation Act 1988 (Cth). Commonwealth of Australia Available at: https://legislation.gov.au/Details/C2021C00060 (Accessed: 14 April 2025).
4. (2022) Airline competition in regional Australia: Monitoring report. Australian Competition and Consumer               Commission                 (ACCC)              Available                at: https://accc.gov.au/publications/airline-competition-in-australia (Accessed: 14 April 2025).
5. (2012) Policy and Guidance Material on the Economic Regulation of International Air Transport (Doc 9587). International Civil Aviation Organization (ICAO) Montreal: ICAO.
6. (2008) Regulation (EC) No. 1008/2008 on common rules for the operation of air services in the Community. European Parliament and Council of the European Official Journal of the European                       Union.                            Available                       at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32008R1008  (Accessed:  9 April 2025).
7. (2020) Peraturan Menteri Perhubungan No. PM 66 Tahun 2020 tentang Kegiatan Penyelenggaraan Angkutan Udara Perintis. Kementerian Perhubungan Republik Indonesia Available at: https://peraturan.bpk.go.id/Home/Details/157142/pm-no-66-tahun-2020 (Accessed: 9 April 2025).
8. (2023) Penerbangan perintis kerap batal, warga kepulauan mengeluh. Tempo.co. Available at:https://nasional.tempo.co/read/1748123/penerbangan-perintis-kerap-batal-warga-kepulauan-mengeluh (Accessed: 9 April 2025).
9. Directorate General of Civil Aviation (DGCA) Indonesia (n.d.) Official website. Available at: https://hubud.dephub.go.id/ (Accessed: 9 April 2025).