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Garuda Indonesia to Raise Ticket Prices: Don't Compare it With International Flights

24 May 2024 09:00 WIB

TEMPO.CO, JakartaNational flag carrier Garuda Indonesia stated that the policy on the upper limit of flight ticket prices shall be revised, as it has remained unchanged since 2019. The Transportation Ministry’s plan to amend the policy is expected to have a significant impact on airfares.

“Although we are aware that this is not easy, we will just convey the real condition that everything (prices) has risen,” Garuda CEO Irfan Setiaputra said at the Garuda Management Building in Tangerang on Wednesday, May 22.

He did not deny the possibility that the hike in the airplane price ceiling could potentially incite public protests. However, he appealed to the public not to compare domestic airfares with international ones.

Given that airplanes are not the primary mode of transportation and are used by specific groups for certain purposes, he hoped people could understand the reasons why ticket prices are costly. “30 percent of our cost is [allocated to] aviation fuel. [Another] 30 percent of the cost is to [aircraft] leasing. About 20 to 30 percent is for maintenance,” Irfan outlined.

When damage occurs and the plane is inoperable, airline operators are obligated to adhere to flight schedules and cannot simply issue an apology or advise passengers to find alternative means of reaching their destination. Thus, Garuda Indonesia's CEO stressed that the airline business is expensive. “It is a business with single-digit margins.”

In November 2023, the Indonesian National Aviation Companies Association (INACA) requested the government to scrap the policy on the upper limit for flight ticket prices and allow the market to dictate prices. The INACA chairman Denon Prawiraatmadja said that the trends and dynamics of the aviation industry are inseparable from jet fuel prices and the rupiah exchange rate against the US dollar, factors that are difficult for the industry to control.

AISYAH AMIRA WAKANG

Editor's Choice: Garuda Indonesia Announces $711.98mn Revenue in Q1 2024

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