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Jakarta Post

Higher regulated airfares could help airlines survive pandemic: INACA

  • Riza Roidila Mufti

    The Jakarta Post

Jakarta   /   Mon, April 20, 2020   /   06:54 pm
Higher regulated airfares could help airlines survive pandemic: INACA Passengers wait at Ngurah Rai International Airport in Bali on March 18, 2020. (Antara/Fikri Yusuf)

Domestic airlines welcome the government’s plan to increase both ceiling and floor airfares since the policy could reduce airlines’ burden amid the pandemic that has left travel-related industries devastated, an industry group says.

The Indonesia National Air Carrier Association (INACA) said higher ceiling prices could help airlines cope with a new regulation that caps passenger capacity at 50 percent per flight in support of the universal public health advice of physical distancing. The rule was stipulated in Transportation Ministerial Regulation No. 18/2020.

“It is inevitable that with the decreasing seating capacity, the seat load factor [on airplanes] will be decreased too, and it will increase the cost per seat per aircraft,” said Denon on April 16. “To reduce our burden, the INACA positively responds to the Transportation Ministry plan to increase the ceiling and floor prices of airline tickets.”

Civil aviation director general Novie Riyanto said the ministry was currently finalizing the ceiling and floor prices for airfares, which would consider stipulations in the new ministerial regulation on transportation controls to slow the spread of COVID-19.

“The new ceiling and floor prices, however, will be temporarily imposed during the large-scale social restrictions (PSBB),” said Novie as quoted by Kontan on April 16.

“The increase in ceiling and floor prices is implemented as a compensation for the airlines who have to bear losses because they are only allowed to fill a maximum of 50 percent of their total seat capacity for passengers.”

The air travel industry is one of the hardest-hit sectors by COVID-19, which has led to a sharp drop in air travel demand globally. Finance Ministry data as of April 17 estimated that the national airlines’ revenue loss had reached Rp 207 billion as a result of the pandemic.