Cheap Airfare Concerns VP Jusuf Kalla, Wary of Bankruptcy

TEMPO.CO, Jakarta - Vice President Jusuf Kalla predicts air carriers may not be able to cover the operational costs and possibly go bankrupt if companies continue to offer cheap airfares. He reminded that there needs to be a balance between consumers’ buying power and profit for air carriers.

“This means that it would not burden the public but can sustain the livelihood of the air carriers,” said VP Jusuf Kalla upon answering questions from attending governors in the national work meeting with Indonesian Provincial Government Association (APPSI) in West Sumatra on Thursday, Feb. 21.

Read: Minister Demand Garuda Indonesia Consistent in Dropping Airfares

The VP said that low-cost carriers have proven to drag carriers into bankruptcy rather than grow the industry. Kalla mentioned several air carriers that went through that phase such as, Mandala, Batavia Air, Adam Air, and many more.

He bluntly said that forcing air carriers to sell cheap flights will only end up into two alternatives, firstly is the bankruptcy of the two remaining carriers and the second is that it would kill domestic flights. The two options will only cause airfares to rise even more radically compared to what people have seen lately.

Meanwhile, the Transportation Ministry confirmed that the tariff set by air carriers are still within the upper cap price set by the government.

ANTARA | TAUFIQ SIDDIQ