INACA: No Subsidies to Lower Airfares Yet

Translator

24 August 2022 12:27 WIB

Denon B. Prawiraatmadja. whitesky.co.id

TEMPO.CO, Jakarta - The Indonesian National Air Carrier Association (INACA) chairman, Denon Prawiraatmadja, said that no regional government has provided subsidies to airlines in order to help lower ticket fares. He said it as a response to the Transportation Ministry's statement encouraging local governments to provide subsidies so that the price of airline tickets will decrease.

"I think none yet," Denon said by phone on Tuesday night," August 23.

He said that if local governments have special requests, such as routes, they should provide stimulus, as those demands and policies will affect airline operational costs, including the high fuel cost that is causing airlines' surcharges to soar.

The technicalities to provide stimulus is also determined by the provinces, as they generally have their own provisions for giving subsidies to business actors.

Transportation Minister Budi Karya Sumadi asked local governments to take part in stabilizing airline ticket prices. He said that on some routes, the seat occupancy rate was only 50 percent or even less.

"If the occupancy rate can increase, the price can be controlled, as ticket prices are directly proportional to the occupancy rate," Budi Karya said in his statement, Thursday, August 18.

Budi Karya also hopes that local governments will market flights to increase load factor. The former boss of Angkasa Pura II (Persero) said he had sent a letter to the local governments to ensure the occupancy rate of passengers and provide other incentives.

President Joko Widodo or Jokowi previously ordered Budi Karya to address the airline ticket price issue. He gave the instruction after receiving complaints about how expensive airline tickets are recently.

Airfares are the largest contributor to inflation from administered prices, apart from household energy, filtered clove cigarettes, and electricity tariffs. The Central Statistics Agency (BPS) noted that the group contributed 0.21 percent the monthly inflation in July, or 6.51 percent year-on-year (yoy).

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