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Airlines ask govt to remove price cap to cope with rising costs
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Touching down: A Garuda Indonesia Airbus A330 lands at Sultan Iskandar Muda International Airport in Blang Bintang, Aceh, on July 13, 2021. (AFP/Chaideer Mahyuddin)
T
he Indonesia National Air Carrier Association (INACA) has proposed that the government remove a price ceiling on economy class tickets for commercial airlines, allowing market mechanisms to determine airfares.
INACA chairman, Denon Prawiraatmadja insisted on Thursday that the removal was not aimed at increasing profits by introducing higher ticket prices but that it would help airlines to cut losses caused by swelling operating costs, he said.
Currently, airlines are facing high operating expenses following a hike in oil prices and the rupiah’s depreciation against the US dollar, which has caused the prices of aviation fuel and spare parts to rise.
“As a result of recommendations from members, INACA hopes that the upper limit tariff can be reviewed so that it allows flexibility for operators to alter their fares considering the high operational costs of airlines,” Denon said, as quoted by Kompas.
Read also: Govt allows higher airfares in response to fuel price hike
In April last year, the Transportation Ministry allowed airlines to raise fares to cover higher aviation fuel costs following a surge in global oil prices.
Under the ministry’s decree, airlines are allowed to exceed the usual price caps on airfares by up to 10 percent for jet aircraft and 20 percent for propeller planes, a regulation that would be reviewed every three months.
