KPPU to Summon Seven Airlines Over Plane Ticket Fares Hike This Week

TEMPO.CO, Jakarta - Member of the Indonesia Competition Commission (KPPU), Gopprera Panggabean reported that this week, the agency has scheduled summons to seven airlines and the government to gather information about the increase in airplane ticket prices ahead of Ramadan.

The seven airlines are Garuda Indonesia, Citilink Indonesia, Sriwijaya Air, Nam Air, Batik Air, Lion Mentari, and Wings Abadi. 

KPPU will also send information requests to relevant associations and travel agents, to obtain information about the policies made by the seven airlines. Starting from the number of tickets sold, subclasses of ticket prices sold, and other airline policies. 

"KPPU will also assess whether the increase in ticket prices is due to an increase in demand, an increase in jet fuel prices, changes in the rupiah exchange rate, or the prices of other cost components that cause changes in the total operating costs of airlines or due to alleged anti-competitive behavior by airline companies," said Gopprera.

He said the form of agreement from airlines is not always about tariffs or through setting ticket prices. He explained that the selling price of airline tickets that does not exceed the upper limit tariff price does not mean that there is no price cartel.

"Agreements or coordination between airlines in selling subclasses of airplane ticket prices that are close to the upper limit tariff but do not exceed the upper limit tariff, or together do not sell or offer cheap ticket price subclasses, or offer cheap ticket price subclasses but in very small quantities, can also be suspected of leading to violations of Law No. 5 of 1999," he said.

It is possible that KPPU can initiate an initial investigation of the initiative case if there is behavior that indicates an alleged violation of Law No. 5 of 1999. KPPU claimed that it would be careful in assessing the cause of the current ticket fare hike.

For information, a subclass is a price differentiation in the aviation sector that is grouped in a certain class package. A competitive market will encourage airlines to sell tickets with various subclasses, ranging from the lowest ticket price to the highest price. 

However, subclass arrangements can also be an instrument for airlines to regulate ticket prices in the market. This rule is stipulated in the Decision of Case No. 15/KPPU-I/2019 concerning Violation of Article 5 and Article 11 of Law Number 5 Year 1999 on unfair business competition. 

It clearly outlines the various mutually adjusting behaviors carried out by the seven airlines. For example, through reduced sales of subclasses with low ticket prices, or an increase in the number of flight cancellations.

AISYAH AMIRA WAKANG

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