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Analysis: Govt to reduce airfare by 10 percent for Christmas, New Year holidays

Tenggara Strategics (The Jakarta Post)
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Sat, December 21, 2024

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Analysis: Govt to reduce airfare by 10 percent for Christmas, New Year holidays A Garuda Indonesia aircraft takes flight. (Shutterstock.com/e X p o s e)

T

he government has announced a plan to reduce domestic airfares 10 percent during the 2024-2025 year-end holiday. The policy, developed in collaboration with various state entities, aims to address the negative impact of high airfares on the tourist industry and capitalize on increased demand over the peak travel season.

Coordinating Infrastructure and Regional Development Minister Agus Harimurti Yudhoyono outlined the three measures to achieve this reduction: a 5.3 percent cut in aviation turbine fuel (avtur) prices compared to the previous month, an 8 percent reduction in jet engine fuel surcharges and a 50 percent cut in airport service fees. Together, these measures are expected to lower airfares 9.9 percent for all passenger categories, generating estimated savings of Rp 472.5 billion (US$29.59 million) over the Christmas and New Year’s holidays.

The government initially pledged to reduce airfares by October, with the proposed solutions including tax exemptions on spare parts for airlines, following a recommendation from the Business Competition Supervisory Commission (KPPU) to end Pertamina’s monopoly on avtur. However, implementation has been a challenge. The National Consumer Protection Agency (BPKN) highlighted ongoing violations of price ceilings on airfares, while the Association of Indonesian Aviation Service Users (APJAPI) pointed out that high distribution and storage costs were driving up avtur prices outside Jakarta.

The avtur price reduction will apply to 19 airports, including major international hubs I Gusti Ngurah Rai (Bali), Juanda (Surabaya, East Java), Sultan Hasanuddin (Maros, South Sulawesi), Kualanamu (Deli Serdang, North Sumatra), Sultan Aji Muhammad Sulaiman Sepinggan (Balikpapan, East Kalimantan) and Yogyakarta.

The other participating airports are: Dortheys Hiyo Eluay (Jayapura, Papua), Sam Ratulangi (Manado, North Sulawesi) and Lombok (West Nusa Tenggara) and Komodo (Labuan Bajo, East Nusa Tenggara/NTT), as well as Mozes Kilangin (Mimika, Central Papua), Domine Eduard Osok (Sorong, Southwest Papua), Supadio (Kubu Raya, West Kalimantan), El Tari (Kupang, NTT) Pattimura (Ambon, Maluku), Frans Kaisepo (Biak Numfor, Papua), Raja Sisingamangaraja XII (North Tapanuli, North Sumatra), Douw Aturure (Nabire, Central Papua) and Frans Xavier Seda (Sikka, NTT).

The 10 percent airfare reduction applies to bookings from Dec. 1 for domestic flights between Dec. 19 and Jan. 3.

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Agus, along with State-Owned Enterprises (SOEs) Minister Erick Thohir and Tourism Minister Widiyanti Putri Wardana, have also agreed to draft follow-up regulations to turn the policy into a long-term initiative. Erick said a similar reduced airfare scheme would apply during the Ramadan-Idul Fitri holiday season, supported by periodic five-year road maps and expanded private sector involvement.

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