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Jakarta Post

Transportation Ministry provides $14.75m stimulus to boost aviation industry

  • Mardika Parama

    The Jakarta Post

Jakarta   /   Mon, October 26, 2020   /   08:22 am
Transportation Ministry provides $14.75m stimulus to boost aviation industry On the rise: Passengers are seen at Terminal 3 of Soekarno-Hatta International Airport in Tangerang, Banten, on Friday. The airport recorded 350 to 400 flights per day in July, up from 243 flights per day in the preceding month. (JP/Dhoni Setiawan)

The Transportation Ministry has agreed to provide the aviation industry with a stimulus package worth Rp 216.5 billion (US$14.75 million) as part of a plan that includes a passenger service charge exemption and a subsidy aimed at cutting costs and boosting demand throughout the COVID-19 pandemic.

The ministry’s air transportation director general, Novie Riyanto, said on Thursday that the stimulus package consisted of Rp 175.7 billion worth of service fee exemptions at 13 airports across Indonesia, as well as Rp 40.8 billion worth of subsidies for a flight facility calibration fee.

The passenger service charge exemption, a component of the flight ticket fee, means that passengers might be afforded lower airplane ticket costs. The exemption would be available for flights booked between Oct. 23 and Oct. 31 with scheduled departure before midnight of Jan. 1, 2021, the ministry stated.

The flight facility subsidy serves to ease the cost burden for airport operators, including state-owned airport operator Angkasa Pura (AP) I and AP II, as the Transportation Ministry previously charged the operators in non-tax revenue to ensure that aircraft equipment, including telecommunications systems and visual landing tools, worked properly.

“We hope the stimulus lowers the burden for those who travel using air transportation and reignites the aviation industry, which could spill over into tourism and other industries,” Novie said.

The COVID-19 pandemic has severely hit tourism and the aviation industry with border restrictions that have prompted people to cancel their travel plans.

Statistics Indonesia data show that the number of domestic air passengers between January and August fell 56.99 percent year-on-year (yoy) to 21.6 million people. Meanwhile, the number of foreign air passengers in the same period plummeted 71.51 percent yoy to 3.5 million people.

The International Air Transport Association (IATA) earlier this year estimated that Indonesia’s aviation industry would suffer a 49 percent passenger drop and an $8.2 billion fall in revenue this year from last year as an impact of the global health crisis.

Novie said that for the stimulus, the Transportation Ministry was targeting airports located near tourist destinations, as the stimulus funds would be sourced from the Tourism and Creative Economy budget.

The stimulus will be directed toward Soekarno-Hatta International Airport and Halim Perdanakusumah International Airport in Greater Jakarta; Sam Ratulangi International Airport in Manado, North Sulawesi; I Gusti Ngurah Rai International Airport in Bali; and Komodo International Airport in Labuan Bajo, East Nusa Tenggara, among other airports.

“The passenger service charge exemption will be given directly to passengers departing from the 13 airports in order to boost the local economy and tourism,” he said.

Passenger service fee rates differ depending on the airport and terminal. For instance, in Sam Ratulangi Airport, the rate is Rp 60,000 per domestic passenger, while in Ngurah Rai International Airport, it is Rp 100,000 per passenger, according to AP I data.

National flag carrier Garuda Indonesia president director Irfan Setiaputra said that the airline welcomed the Transportation Ministry’s decision and hoped for a passenger boost.

“During these challenging times due to the COVID-19 pandemic, the passenger service charge stimulus is a significant step that we hope can support the aviation industry’s recovery effort by increasing demand from the public,” he said in a statement released on Thursday.

According to Garuda Indonesia data, the number of passengers who flew with the airline between January and August dropped 70.1 percent yoy to 3.83 million.

Indonesian National Air Carriers Association (INACA) chairperson Denon Prawiraatmadja told The Jakarta Post that the association welcomed the stimulus even though it was hoping for a direct airline stimulus, in addition to the current exemption and subsidy.

“Surely we are also hoping for an airline stimulus. However, we are currently focusing on bringing the passenger number closer to pre-pandemic levels and the stimulus significantly supports that effort,” he told the Post in a phone interview.