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Govt evaluates airline ticket pricing formula amid rising costs
Garuda Indonesia said flying an aircraft from Jakarta to Bali previously cost Rp 194 million (US$11,876) per flight in 2019, but has risen by 38 percent to Rp 269 million per flight
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Garuda Indonesia aircraft are seen at Soekarno Hatta International Airport in Tangerang, Banten, in this file photo. (Kompas/Agus Susanto)
T
he Transportation Ministry is evaluating airline ticket prices amid mounting cost pressures, which could lead to increased airfares paid by passengers, despite the government’s longstanding efforts to keep prices affordable.
Lukman F. Laisa, the ministry’s civil aviation director general, told lawmakers on House of Representatives Commission V, which oversees infrastructure and transportation, on Thursday that the evaluation was being conducted in light of several key considerations.
He first pointed out rising airline maintenance costs, leading to higher operational expenses to reactivate aircraft, previously grounded amid the decline in travel demand during the COVID-19 pandemic.
“There are disruptions in the global spare parts ecosystem, such as engine-related difficulties, rising contract costs and a weakening rupiah exchange rate against the United States dollar,” Lukman added, as quoted from Kumparan.
Moreover, new accounting standards are expected to reduce aircraft leasing costs, as they are subject to depreciation. Airlines have also restructured their leasing debts after COVID 19.
Given these considerations, the ministry has proposed several changes in the airline ticket pricing regulations.
“There have been changes in fare structure with a new calculation formula that takes travel time into account, as well as revised upper and lower fare limits,” Lukman explained.
