Citilink president director Juliandra Nurtjahjo said that, as a low-cost carrier, the company could not only rely on flight ticket sales and had to be creative in boosting other revenue streams.

“To survive, we should be innovative. In our case, we maximize our ancillary revenue by selling our cabin space for advertising. Thus, every time you get on our plane, you will see advertisements installed in our cabin. From there, we get additional revenue,” said Juliandra on Tuesday.

Citilink, a subsidiary of national flag carrier Garuda Indonesia, is also set to start charging an additional fee for checked baggage to generate additional revenue later this month.

Juliandra said focusing more on ancillary revenue was a must for the company given the challenges the industry faced in 2018 as a result of soaring jet fuel costs and rupiah depreciation.

“In 2018, it was very difficult for us to earn a profit since our revenue was eroded by the weight of additional costs as a result of increasing jet fuel prices and the weakening rupiah last year,” he explained.

Separately, budget airline AirAsia Indonesia CEO Dendy Kurniawan said last year in particular was tough as jet fuel reached its highest level at almost US$100 per barrel in October, according to data from the International Air Transport Association.

Moreover, the airline industry is faced with small margins between operational costs and profits, to say nothing of the tight competition from abroad.

“To deal with this challenging situation, the first thing we should work on is cost efficiency. […] Efficiency could be in any form. In fuel, for example, we could implement fuel hedging,” he said on Monday.

Dendy also said airlines must be more innovative by reading the market and being creative in offering new products.

Meanwhile, Garuda Indonesia president director I Gusti Ngurah Ashkara Danadiputra, also known as Ari Askhara, said Garuda focused on cost efficiency and maximizing revenues via product diversification in areas such as cargo business, while also capitalizing on ad revenue.

Garuda also launched several programs, such as its vintage flight series and its “music in the sky” program to attract more passengers. In terms of costs, Garuda is attempting negotiate its leasing rates.

“If we only rely on ticket sales, we will sink,” he said.

Operational costs that are calculated in the US dollar, such as maintenance and aircraft leasing, and components that are reliant on foreign exchange, such as jet fuel, have also hurt domestic airlines’ profits from ticket sales.

Ari, who is also head of the Indonesia National Air Carriers Association, said on Monday that operational costs mostly determined ticket prices.

The cost of jet fuel contributes 40 to 50 percent of ticket fares, while aircraft leasing and aircraft maintenance account for 20 percent each, and terminal and airport facilities account for 2 to 10 percent.

Although operational costs fluctuated, ticket prices did not follow suit, he said, as they were regulated under Transportation Ministerial Regulation No. 14/2016.

As evidenced in complaints on social media last week, the market has not responded well to increases in ticket prices.

Public policy expert Agus Pambagio said amid the challenging situation for the aviation industry, airlines could increase its prices, but must do so gradually.

Meanwhile, Indonesian Ombudsman commissioner Alvin Lie urged the government to look deeper into understanding the challenging situation faced by airlines, while at the same time tending to the customers’ needs.

Further discussions between the government, stakeholders and airlines to find a win-win solution were needed, he said.

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