Indonesia to Allow Airlines to Raise Fares by Up to 13%, Minister Says

FUEL POLICY - JAKARTA, April 6 - Indonesia will allow airlines to raise ticket prices by increasing the fuel surcharge, while waiving some airline-related taxes, senior economic minister Airlangga Hartarto told reporters on Monday.

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Airlines are now allowed to raise ticket fares after the government said it would allow a fuel surcharge hike of up to 38% of the upper airfare limit, but it will also introduce tax exemptions and other policies in a bid to control fares amid the ongoing war in the Middle East.

"The government has prepared mitigation measures so that ticket prices remain affordable to people," Airlangga said.

The measures include exemptionsfor value-added taxes for airlines and import duties for aircraft spare parts.

The government will allow airfare hikes in the range of 9%-13%.

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Airlines were asking for a 50% fuel surcharge, said Indonesia's Transport Minister Dudy Purwagandhi, adding that the government views 38% as the ideal figure to maintain purchasing power and allow the airlines to avoid heavy losses.

Airlangga said the policy would be in effect for the next two months and is subject to further evaluations depending on the developments on the war in the Middle East.