Jakarta. One of the biggest cigarette companies in Indonesia, Gudang Garam, is going ahead with a plan to build its own airport in Kediri, East Java, having already acquired 90 percent of the 457 hectares of land needed for the development.
"We've freed up 90 percent of the land, but building an airport is not as easy as we thought, we're still processing the permit," Gudang Garam director Istata Taswin Siddharta said at the Indonesia Stock Exchange in Jakarta on Tuesday.
Once it is completed, the airport will be operated by state-owned airport operator Angkasa Pura I.
Istata said building the airport serves no commercial purpose for the company but reflects its desire to contribute to the local economy.
"It's not a sign of us diversifying our business to the infrastructure sector. It could indeed develop into a new business, but in principle we're not doing this for profit," he said.
The project is being self-funded by the company, using its own internal funding so it does not affect the business group's finances significantly.
On Tuesday, Istata did not reveal any details of the budget or the expected date of completion for the project.
"We don't have a fixed timeline yet, but construction will take at least two years. And we're still calculating the budget," the director said.
The new airport in Kediri will be located 120 kilometers from Surabaya and will be close enough to Blitar and Nganjuk to be used by travelers from those two cities as well.
Construction on the airport is expected to start this year. The first step will be to build the 2.4-kilometer runway, long enough for Boeing 737s.
Meanwhile, sales for the company rose 16.4 percent to Rp 52.7 trillion ($3.7 billion) in the first half of this year, compared to Rp 45.3 trillion in the same period last year.
"[The sales increase] was down to customer loyalty, the quality of our products and their accessibility and affordability," Istata said.