Airfare Tariff Predicted to Contribute to Inflation Until Year End

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Non Koresponden

Editor

Laila Afifa

5 August 2022 09:42 WIB

TEMPO.CO, Jakarta - Director Executive of Institute for Development of Economics and Finance (Indef) Tauhid Ahmad projected that airfare tariffs will continue to contribute to high inflation until the end of 2022.

"The [tariff of] air transport until the end of this year is predicted to still be the highest," said Tauhid in a webinar entitled Managing Inflation and Anticipating Economic Stagnation held by Indonesia's Banking Development Institute (LPPI) in Jakarta, Thursday, July 4.

Tauhid said that airlines are trying to add the number of flights after they were forced to decrease it due to the Covid-19 pandemic from 2020 until 2021. However, the revival will take a long time as the pandemic has impacted the loss of the airlines.

"Many aircraft were grounded, being laid out, so it's not easy to immediately increase the flight," said Tauhid.

The airlines must also face the aircraft fuel, or Avtur, price hike caused by the fluctuation of the world's energy commodity prices. In addition, there are only a handful of parent companies managing airlines. As a result, ticket prices between airlines are no longer competitive.

"The competition in the ticket prices feels lacking," he said.

At present, airfare tariff is the biggest contributor to inflation from the group of administered prices, apart from household fuel, kretek cigarettes, and electricity tariffs.

Previously, Statistic Indonesia (BPS) data showed that this group contributed to the July 2022 inflation at 0.21 percent month to month or 6.51 percent year on year (YoY).

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