INACA: Airfares Should Rise by 23 Percent

TEMPO.CO, Jakarta - The Indonesian Air Carrier Association (INACA) is calling on the government to increase the ceiling price of airfares by up to 23 percent. According to the head of INACA, Arief Wibowo, the adjustments were necessary to better reflect the depreciating value of the rupiah, which consequently increases the operating costs of carriers. “We have submitted a proposal to the government,” Arief told Tempo on Tuesday, September 9, 2014. 

Arief said the proposal to revise tha airfare ceiling price was sent to the government in 2013. The government, however, decided to impose a 10 percent surcharge as a transitional policy as opposed to raising the price. According to Arief, the surcharge does not sufficiently cover the ballooning operating costs shouldered by airlines, as prices of jet fuel nears Rp12,000 per liter due to the fluctuating rupiah.

“Airfare prices need to increase, it needs to reflect the realities of the rupiah and the cost of jet fuels, which has climbed by around 23 percent,” said Arief.

Speaking at a book launch event at the Dharmawangsa Hotel in Jakarta, Transportation Minister E.E. Mangindaan said increasing the airfare ceiling price is an obligation that he has yet to fulfill during his tenure as Transportation Minister. “I have an obligation to increase the tariff,” said Mangindaan.

The Transportation Ministry’s chief of public relations, Julius Adravida Barata, said there were indeed plans to raise the airfare ceiling price, and that the government would continue to analyze the trends of jet fuel prices and the rupiah exchange rate before deciding on the matter. “We should be able to decide by the end of this month, at the soonest,” Barata told Tempo.

Barata says the government fears the rate hike will have no effect if the parameters influencing the hike still fluctuate. “The hike might prove to be too insignificant at times, while it could also be to steep in others,” said Barata.

SUTJI DECILYA