Jet Fuel Hike Triggers Year-end Airfare Surge



Petir Garda Bhwana

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  • TEMPO.CO, Jakarta - Transportation Minister Budi Karya Sumadi is lobbying the State-Owned Enterprises Ministry and Pertamina (Persero) to reduce the price of jet fuel that he considered too high, triggering a surge in flight rates. The discussion races against the clock because the demand for air services will surge in the Christmas and year-end holiday season.

    "We have invited them for a review, and asked to rebalance prices," he said at a work meeting at the House of Representatives building, Jakarta, Monday, November 25.

    Budi said that aviation fuel tariff in Jakarta is already 25 percent higher than in Singapore. This is burdening airlines as fuel makes up for 40 percent of operating cost.  

    Pertamina's corporate marketing director Basuki Trikora Putra said that the company's product prices always refer to the Mean of Platts Singapore (MOPS) oil price. Price changes, he said, are always published twice a month and agreed upon by buyers, including airlines.

    Meanwhile, Garuda Indonesia's commerce director Pikri Ilham Kurniansyah is also waiting for the discussion on jet fuel price adjustments. He said that a surge in new orders will be drastic three weeks before Christmas.

    "The increase in volume on domestic routes may be small, only 5-6 percent. The increase is actually on international routes," he said yesterday.