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Air carriers call for more flexibility in determining airfares
Local air carriers have called on the government to ease the new ministerial regulation that limits the minimum airfare they can charge passengers, saying the policy had hampered them in providing promotional fares
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ocal air carriers have called on the government to ease the new ministerial regulation that limits the minimum airfare they can charge passengers, saying the policy had hampered them in providing promotional fares.
Air Asia Indonesia president director Sunu Widyatmoko said on Thursday that the Transportation Ministry had not officially informed the airline regarding the policy to limit promotional airfares, as stated in Transportation Ministry Regulation No. 51/2014 on a price ceiling mechanism.
'Every airline has its own business strategy. A limitation on minimum ticket prices will complicate our business, where we often offer flight ticket promotions with lower fares,' Sunu told reporters.
Under the new regulation, which is scheduled to become effective in November, for scheduled low-cost airlines the minimum price for a Jakarta-Yogyakarta ticket is Rp 452,000 (US$37.4); the minimum price for Jakarta-Surabaya (East Java) is Rp 563,000 and the minimum price for Jakarta-Medan (North Sumatra) is Rp 899,950.
'Under this new regulation, for example, we could not offer a Jakarta-Yogyakarta flight for under
Rp 400,000 without permission from the government,' Air Asia Indonesia corporate secretary Audrey Progastama said.
'Previously, we were not required to report, and this regulation will definitely complicate our operations because whenever we are planning to launch promotional programs that offer flights for lower prices, we will have to report to the ministry,' she said.
Lion Air general affairs director Edward Sirait also previously said that as the airline offered several classes of airfare to adjust to the public's purchasing power, it would try to negotiate with the government regarding the policy.
The Transportation Ministry's air transportation director, Djoko Murjatmodjo, said that the regulation solely aimed at controlling flight safety standards for low-cost carriers, therefore airlines were required to report to the ministry prior to offering promotions.
Djoko also said that the regulation was issued based on a recommendation from the Business Competition Supervisory Commission (KPPU) in an attempt to improve the business climate for low-cost airlines.
Citilink's vice president of corporate communications, Benny S. Butarbutar, meanwhile said that the regulation would help to improve the sustainability of the country's airline industry.
'The regulation not only protects the customers but also the industry,' Benny told The Jakarta Post over the phone. 'The country's airline industry is not mature enough, therefore it still needs to be regulated,' he said.
As reported, the price ceiling mechanism ministerial regulation was issued to help airlines deal with rising operational costs.
Under the regulation, for full service airlines, the maximum price for a Jakarta-Denpasar ticket will increase from Rp 1.4 million to Rp 1.54 million; the maximum price for a Jakarta-Medan ticket will go up from Rp 1.84 million to Rp 2 million, and the maximum price for a Jakarta-Makassar ticket will increase from Rp 1.85 million to Rp 1.93 million.
The regulation stated that full service airlines were allowed to charge up to 100 percent of the ceiling, while medium- and low-cost carriers were allowed to charge up to 90 percent and 85 percent, respectively. Meanwhile, the minimum price for full service carriers for the Jakarta-Yogyakarta route is Rp 532,000; Jakarta-Surabaya is Rp 663,500 and Jakarta-Medan is Rp 1 million.
