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Govt scraps taxes on airplane spare part imports to bring down domestic airfares
The regulation also scraps import taxes on train part imports and imported components for machinery used by the Defense Ministry.
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Soft landing: An airplane of national carrier Garuda Indonesia lands on Feb. 21, 2024, on a runway at Sultan Iskandar Muda International Airport in Blang Bintang, in Banda Aceh, Aceh. (AFP/Chaideer Mahyuddin)
T
he Finance Ministry has issued a new regulation that will eliminate taxes on imported spare parts for airplanes to cut flight costs and bring down the country’s high domestic airfares.
In Finance Ministry Regulation No. 81/2024 on taxation regulations for the core tax system, the airplane spare parts, as well as aviation safety components, are among the 19 items that will be free from taxes starting January next year.
The regulation also scraps import taxes on train part imports and imported components for machinery used by the Defense Ministry.
Read also: Govt forms task force to fight prolonged high domestic airfare prices
The Business Competition Supervisory Commission (KPPU) earlier said that import taxes on spare parts accounted for about 22 to 25 percent of an airline’s operational costs, leaving it among the largest contributors driving up ticket prices.
National Economic Council (DEN) chairman Luhut Binsar Pandjaitan said Indonesia’s domestic airfares are the second most expensive in the world after Brazil.
He said the government is planning to bring down the domestic airfares by cutting operational costs, reducing tariffs and providing fiscal incentives. Jet fuel is also a major driver of increasing ticket prices, as it accounts for 40 percent of an airline ticket.
