Govt to issue decree on new airfares this month

JAKARTA. The government is expected to issue a transportation ministerial decree revising airfare ceilings this month.

“We plan to issue the new airfare-ceiling decree for economy-class tickets this month,” air transportation director at the Transportation Ministry Djoko Murjatmodjo told The Jakarta Post on Tuesday, adding that the ceiling price would be increased by around 10 percent.

He said his office had communicated the plan to relevant parties in the aviation sector, including operators. He said the ceiling price needed to be increased due to a number of factors, namely the depreciation of the rupiah and the rising price of aviation turbine fuel (avtur) in the past few years.

The current ceiling for airfare is stipulated in Transportation Ministry Regulation No. 26/2010. The maximum airfare for Jakarta–Denpasar, for instance, is Rp 1,478,000 (US$154), while Jakarta-Makassar is Rp 1,846,000 and Jakarta–Medan stands at Rp 1,847,000. These prices exclude 10 percent value-added tax, travel insurance, passenger service charges or airport taxes.

According to the regulation, full-service carriers such as Garuda Indonesia and Batik Air are allowed to charge up to 100 percent of the ceiling, while medium- and low-cost carriers are allowed to charge up to 90 percent and 85 percent, respectively.

Separately, Indonesian National Air Carriers Association (INACA) chairman Arif Wibowo said domestic airlines would find it difficult to compete with other airlines in the ASEAN region when the ASEAN Open Skies policy was implemented in 2015 if the government did not revise the ceiling price immediately and scrap the import tax on spare parts. “We still need to import a lot of spare parts for aircraft, which increases our operating costs,” Arif said.