TEMPO.CO, Jakarta - The Indonesian Hotel and Restaurant Association (PHRI), encouraged the government to apply the open sky system, which will allow foreign airlines to conduct business in Indonesian airspace.
PHRI Chairman Hariyadi Sukamdani suspected that the recent hike in airplane ticket prices were caused by lack of business competition in the airline industry. He said that he had one suggested the government to cooperate with foreign airlines to expand to Indonesia.
"We had proposed to the government to allow regional airlines to enter Indonesia to add more domestic routes. It can be Jetstar, AirAsia, or other airlines. So this is certainly good news," Hariyadi said in an official statement on Sunday, June 2, 2019.
Hariyadi said that until now the price of plane tickets is still too expensive. He asserted that the expensive tickets had brought effects to the tourism industry, especially, travel agents and hotels.
"With the spiking plane tickets, it certainly affect the hotel industry. It certainly decreases occupancy rate," Hariyadi said.
Hariyadi further said that with only to airlines operating in Indonesia, there is no fair competition. Hariyadi argued that the current condition had resulted in unhealthy business competition. For example, he explained that if one business increase its price, its competitor will see an opportunity to gain higher profits and follow by increasing their prices, despite being lower compared to its counterpart.
"The other key player will also increase prices, although not as high as the other business. This is because the businesses saw an opportunity to gain profits in an industry dominated by only two players. The public were left with no choices," Hariyadi stated.
Previously, President Joko "Jokowi" Widodo had planned to apply the open sky policy by allowing foreign airlines to operate in Indonesia. The President asserted that by higher number of airlines will allow better competition of ticket prices.
Jokowi also admitted that the government had tried to reduce plane ticket price by lowering the upper limit prices and increasing the lower limit prices.
In addition, the prices of jet fuel have also been reduced because it is believed to constitute 40 percent of the total operational costs of airlines.
"The lower limit prices and jet fuel prices have been lowered, not only returned to its initial level. Indeed, plane ticket prices is yet to return to normal. May be there is lack of competition," Jokowi said.