Ministry Urges LCC to Keep Airfares at 50% below Upper Limit

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Laila Afifa

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  • TEMPO.CO, Jakarta - Transportation Minister Budi Karya Sumadi appealed to the low-cost carrier (LCC) to adjust airfares following his ministry's plan to cut the top tariff limit for airline tickets by 12-16 percent.

    "We urge budget airlines to adjust rates; at least provide a 50- percent tariff space from the upper limit rate," the minister said here on Monday night, May 13.

    He said he had taken into account several components in the price structure that form airfares before deciding to cut the upper limit rate. He guarantees that the policy will not disrupt the financial health of an airline.

    Some of the conditions that support his plan, the minister said, include the downtrend in jet fuel prices. Moreover, the seat occupancy rate and the on-time performance (OTP) of airlines have been quite high and airport management is excellent. 

    "Good OTP and management are very influential to on-time takeoff and touch down, thus allowing efficiencies in fuel consumption and human resource use. This is important," the minister said. 

    Budi said he would disseminate the decision to all stakeholders. He will also speed-up the required paperwork to get the policy ratified.

    "We will see to it that it would be signed put in effect in two days," he said.

    Caesar Akbar