Airfares Expected to Drop 15%

TEMPO.CO, Jakarta - The government has decided to intervene with airline ticket prices by amending the rule on the upper limit tariff (TBA)—lowering the top threshold by 15 percent. The decision is made to end the polemic of soaring domestic tickets since the beginning of 2019.

The government plans to announce the 15-percent TBA cut today after Transportation Minister Budi Karya Sumadi reported the results of his team's calculations to the Coordinating Minister for Economic Affairs, Darmin Nasution.

To Tempo, Budi Karya said last week that this step was taken because airlines have failed to comply with his Ministry's request to cut prices by means of applying sub-class categories.

Read: Govt Forces Airlines to Lower Ticket Prices

The surge in airplane ticket prices has caused public uproar since the start of this year. The Business Competition Supervisory Commission (KPPU) is also investigating the alleged cartel in the aviation industry, following the seemingly "mutual accord" to raise ticket prices.

The 15-percent TBA cut is expected to be followed by declining ticket prices. Rules stipulate that airlines are only allowed to set a maximum tariff of a certain amount; 100 percent of the TBA for full service flights; 90 percent for medium service airlines; and 85 percent for budget carriers.

FRANSISCA CHRISTY ROSANA | DIAS PRASONGKO | YOHANES PASKALIS PAE DALE