High Market Concentration Index: Are Indonesian Airlines an Oligopoly?

The Herfindahl-Hirschman Index (HHI), an indicator of airline market concentration, increased by 858 points in 2018 to 4,624 points. In 2017, the HHI for Indonesian airlines was 3,766 points. This increase in the HHI value was due to the acquisition of Sriwijaya Group's operations by Garuda Indonesia Group.

A higher HHI value indicates that the Indonesian airline market is becoming more concentrated, moving towards an oligopoly or duopoly. According to Indef researcher Nailul Huda, this acquisition has reduced the potential for other airlines to compete with the two major players, Garuda Indonesia and Lion Air Group.

Since 2008, the HHI value for Indonesian airlines has shown a consecutive increase. In 2013, there was an increase of more than 200 points, which was considered within reasonable limits. The recent acquisition of Sriwijaya resulted in a significant increase of 858 points in the HHI.

(See Databoks: [Garuda's Market Share Reaches 46% After Acquiring Sriwijaya Group](https://databoks.katadata.co.id/datapublish/2019/06/19/pangsa-pasar-garuda-jadi-46-setelah-ambil-alih-sriwijaya-group))