TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Govt struggles to disburse cash incentive to airlines
The government is struggling to disburse incentive payments to airlines carrying international passengers on new flight routes, raising questions about the effectiveness of a policy aimed at luring more foreign tourists to Indonesia
Change Size
T
he government is struggling to disburse incentive payments to airlines carrying international passengers on new flight routes, raising questions about the effectiveness of a policy aimed at luring more foreign tourists to Indonesia.
The government has allocated Rp 150 billion (US$10.5 million) this year to support airlines that serve foreign tourists on new routes through charter flights, and it will most likely earmark a similar amount next year.
The incentive payment is intended to cushion losses suffered by carriers in the initial period after opening new routes. It is part of government efforts to improve air connectivity, as the country hopes to welcome 15 million tourists from overseas this year and 20 million next year.
The Tourism Ministry’s undersecretary for overseas promotion, I Gde Pitana, said that of the Rp 150 billion allotted this year, only Rp 100 billion had been disbursed to airlines so far.
“Not all of the [budgeted funds] have been spent, because there are some administrative issues,” he said on Tuesday, referring to the type of flights and the routes eligible for airlines to claim the incentive.
The incentive is reserved for airlines that launch new routes and based on the calculation of total passengers carried on the route. It is estimated at around $20 per person.
However, Pitana hinted that the scheme was not working entirely as intended, as the ministry ended up using the lion’s share of the allocated funds — around Rp 80 billion — for joint promotion with airlines, while only some Rp 20 billion had been used for the cash subsidy.
The ministry has so far paid out subsidies under the scheme to the country’s largest low-cost carrier, Lion Air, as well as to rival low-cost carrier Indonesia AirAsia, Garuda Indonesia subsidiary Citilink and private carrier Sriwijaya Air.
Tourism Minister Arief Yahya has noted that more than 95 percent of foreign tourists come to Indonesia by air, while the rest opt for other modes of transportation, such as ferries, with many of those crossing over to Riau Islands from Singapore.
The ministry previously said it needed an additional capacity of 4 million aircraft seats this year over its capacity of 19.5 million seats last year. The ministry estimates that meeting the 2019 foreign tourist target may require a capacity of 30 million seats.
Pitana said the ministry had identified demand for another 4 million seats next year and would work with airlines, state-owned air navigation firm AirNav and the Transportation Ministry to allocate more flight slots.
Sriwijaya Air senior manager of corporate communications Agus Soejono said the airline would prefer a general subsidy of operating costs for the new routes, instead of the passenger-based subsidy, arguing that opening new routes was a hassle in itself.
“Opening a new route is not easy, so it should be a team effort,” he said.
Meanwhile, Lion Air, which carries about 10 percent of all inbound tourists, is in the administrative process of requesting the subsidy on foreign passengers it carried from October to December from the Tourism Ministry. It is still calculating the height of the incentive payment to claim.
Lion Air plans to open 27 new charter flight routes from 20 cities in China, the government’s current main foreign market, by next year. It currently flies to and from 24 destinations in China.
“We want to contribute at least 2.5 million to 3 million foreign visitors,” Lion Air managing director Daniel Putut said.
