THE Indonesian National Airlines Association (INACA) welcomes the government’s efforts to reduce costs in the national aviation industry.
“With the reduction in costs, it is hoped that airlines will get a profit margin from their operations so that airlines can carry out flight operations well,” said INACA General Chair Denon Prawiraatmadja as reported by BetweenWednesday (17/6).
Denon assessed that with these efforts, INACA can help the government in developing national flight connectivity.
INACA also welcomed the formation of the National Air Transportation Ticket Price Supervision Task Force. However, in order for this committee to run effectively, what must be considered is who its members are, what their authority is, what their work program is and how to implement it.
Denon said that the problems surrounding national aviation were very complex and involved various ministries and institutions.
“For that reason, the committee must be truly strong both legally and operationally and involve various aviation stakeholders, so that its performance is good and correct,” said Denon.
Also read: Plans for Operating Foreign Airlines Domestically Need to be Studied Carefully
According to him, currently flight costs are very high, exceeding the ticket prices set by the government since 2019. As a result, airlines are at a loss and operate flights just to survive and cannot develop their businesses.
“High costs originating from operational and non-operational flight costs must be reduced or eliminated,” he said.
He said that the high costs of flight operations, for example, are the price of aviation fuel which is higher than in neighboring countries, the queue of planes on the ground to take off and in the air to land which has the potential to waste fuel, airport costs and flight navigation services and others.
Also read: Commitment to ‘Operational and Service Excellence’, Pelita Air Wins Aviation Industry Award
Meanwhile, the high costs of non-operational flights, for example, are the various taxes and import duties that are applied multiple times.
“Currently, taxes are imposed starting from taxes on aviation fuel, taxes and duties on aircraft and spare parts such as import duties, import income tax, VAT and VAT on luxury goods spare parts, up to VAT on airline tickets. Thus, double taxation occurs. Whereas in other countries, these taxes and duties do not exist,” said Denon.
He also said that most flight costs are directly or indirectly affected by the US dollar exchange rate. Thus, the stronger the US dollar once morest the rupiah, the higher the flight costs will be.
Read also: Singapore to Require Low-Carbon Airline Fuel from 2026
“This also needs to be anticipated and a solution sought together,” said Denon.
In addition, the airport service fee for passengers (Passenger Service Charge/ PSC) which is included in the ticket price component also makes the price of plane tickets look higher.
“Passengers do not know that the PSC is not for the airline but for the airport management. However, because it is in one component, passengers assume it is part of the airline’s flight ticket,” said Denon.
Furthermore, INACA also highlighted the current unhealthy aviation business climate. This is because there is still a monopoly in the aviation business so that there is price regulation by one party and there is no healthy business competition.
Some of the monopolies that are currently occurring include monopolies on aviation fuel providers at airports, monopolies on airport management by the government, either through BUMN or BLU and UPBU of the Ministry of Transportation, as well as monopolies on flight operations by certain airlines or airline groups.
“To create a healthy business climate and business competition, the monopoly must be minimized or eliminated. One example of minimizing flight operational monopoly is better management of flight slots,” said Denon.
Slot management must be based on the principle of fairness for airlines and market forces. The time gap between airlines must be considered to avoid unhealthy competition.
In addition, slot managers must enforce the rules strictly so that airlines comply with applicable rules. Slots that are not used within a certain period must be immediately withdrawn and filled by other airlines.
However, the government must also pay attention to airlines that fly virgin routes, namely routes where there were previously no flights.
“The government must provide protection to the airline that first flies it within a certain period of time by continuously evaluating the aviation market in the area,” he also said.
Additional flights by other airlines can only be implemented if the market is strong and the first airline has made a profit.
“Thus there is healthy business competition and on the other hand passengers also get better service,” said Denon. (Z-6)
#INACA #Welcomes #Government #Efforts #Aviation #Industry #Costs
