Saturday, 14 December 2019

Garuda Indonesia Talks of Drop in Airfare Ceiling Price

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Laila Afifa

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  • TEMPO.CO, Tangerang - Responding to the new regulation concerning airfaresGaruda Indonesia commerce director Fikri Ilham Kurniansyah said that the decline in price ceiling for domestic flight ticket would not beset the business.

    “The determination on price ceiling (TBA) is complicated because it requires cost reduction. [But] for airlines, there is no problem,” said Fikri in the Garuda Maintenance Facilities (GMF) on Wednesday, May 8.

    Earlier, Coordinating Minister for Maritime Affairs Luhut Pandjaitan ensured that the maximum limit of domestic ticket pricing would be lowered. Based on the information from Transportation Minister Budi Karya Sumadi, the drop amounted to 15 percent.

    “Yes, the price ceiling has been lowered by 15 percent. Garuda Indonesia said yes, Rini (Minister of State-owned Enterprises or SOE) has also announced it,” said Luhut in his office, Jakarta, Wednesday, May 8.

    According to Fikri, the government did not reduce the TBA, but rather evaluated the cost structure. Several variables for the cost reduction, he added, could be seen from the exchange rate and the navigation cost.

    Fikri went on to say that Garuda Indonesia obtained two percent revenue from selling flight tickets, and that could only cover the operational cost. While, the flight operational cost comprised of jet fuel or avtur, maintenance, and rental aircraft.

    “That’s already 70 percent and all in dollars, while our revenue is in rupiah,” Fikri said.

    Since the end of 2018, public complaint emerged following the surge in airfares. Transportation Minister Budi Karya Sumadi then started narrating his option to revise aviation rules.

    The Central Statistics Agency (BPS) recorded that the number of airline passengers for domestic flights declined by 17.66 percent from January to March 2019 year-on-year. The drop was due to the skyrocketing airline's tariff that was starting from the end of 2018, said BPS Chairman Suhariyanto on Thursday, May 2.

    JONIANSYAH | CAESAR AKBAR

    Read: Airfare Ceiling Price to be Revised, Ministry Says