TEMPO.CO, Jakarta - The government would loosen regulations on the permit of foreign airlines to operate domestic flights in a bid to improve the aviation industry through competition. Coordinating Ministry for Economic Affairs secretary Susiwijono Moegiarso said it was a measure to suppress the rising airlines tariff.
“In response to the problem. [we] consider to revise the negative investment list policy affecting foreign airlines,” Susiwijono told Tempo, Wednesday, June 13.
On Presidential Regulation No. 44/2016 concerning List of Closed and Open Business Fields with Requirements in the Investment Sector, foreign airlines willing to operate domestic flights in Indonesia must open regional firm with a maximum share of 49 percent and posses 10 aircraft for scheduled commercial operation.
Foreign airlines must also abide by Transportation Ministerial Decree No. 45/2017 on aviation noting requirements for submitting route requests and adding and changing routes.
Susiwijono explained the policy relaxation was an option to lower airlines tariff because the operation of foreign airlines in the country would encourage competition in the national aviation industry that was dominated by two major groups, Garuda Indonesia and Lion Air.
“The reduction in upper limit tariff (TBA) seems to be ineffective, so we need to consider other solutions,” he added.
According to Siswijono, a meeting regarding the issue would be held next week with Transportation Ministry, Tourism Ministry, SOE Ministry, Industry Ministry, the Capital Investment Coordinating Board (BKPM), airlines, and airport operators.
“An amendment on flight permit will be issued along with the revised list of negative investment for other sectors,” he said.
Previously, President Joko Widodo or Jokowi allowed foreign airlines to operate domestic routes in order to lower high airlines tariff as it would trigger business competition.