Aviation observer Gerry Soejatman believes that it is not easy for the government to lower airline ticket prices if it does not correct the price of aviation fuel. This is because fuel prices affect ticket prices. If they are higher, ticket prices will increase by around 38% – 45%.
“Is the government capable of lowering the price of aviation fuel? Because the point is on the price of aviation fuel and the rupiah exchange rate once morest the US dollar. So, it is difficult to lower the price of plane tickets at this time,” he told Media Indonesia, Sunday (14/7).
According to him, airline companies have had difficulty in making efficiency of aircraft cost operations because they depend on fluctuations in the rupiah exchange rate once morest the US dollar. Around 80% of airline operational costs use US dollar foreign exchange.
Starting from the price of aviation fuel, components/spare parts, leasing costs or renting aircraft from abroad. If the US dollar gets stronger, of course operational costs will be more expensive.
Gerry proposed that the government revise the upper limit tariff (TBA) provisions and remove the lower limit tariff (TBB) provisions to provide benefits for airline companies.
With low cost carrier (LCC) fares of Rp550 thousand-Rp600 thousand per hour per seat for domestic routes, airlines, he said, were forced to sell at a price range of Rp1 million so as not to suffer losses due to value added tax (VAT) and additional airport taxes.
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Currently, the regulation of airline ticket prices is contained in the Regulation of the Minister of Transportation No. PM 20 of 2019 concerning Procedures and Formulations for Calculating the Upper Limit Tariff for Economy Class Passengers for Domestic Scheduled Commercial Air Transportation and the Decree of the Minister of Transportation No. KM 106 of 2019 concerning the Upper Limit Tariff for Economy Class Passengers for Domestic Scheduled Commercial Air Transportation. In this regulation, airlines are not allowed to sell tickets above the TBA or below the TBB.
“In fact, now that the TBA has not been increased, the airlines are in a tight spot. With increased operational costs, the selling price tends to approach the TBA,” he explained.
Contacted separately, National Aviation Business Independent analyst Gatot Rahardjo is of the view that the government is reluctant to raise BTA rates because it will increase the price of plane tickets. This is believed to be protested by many people.
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Therefore, the option of lowering the airline’s operating costs was taken, so that costs are lower or equal to current revenues. However, this effort has consequences for state revenues.
“One of the impacts is that state revenue will decrease if, for example, taxes and import duties are abolished,” he said.
The ticket price reduction task force was asked to immediately improve flight-related regulations that were said to overlap in one ministry or between ministries and institutions, as well as correct regulations that were not in accordance with operations in the field.
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“There are many rules that need to be changed and synchronized between ministries and institutions so that costs can be reduced and ticket prices can also be reduced,” he said.
Member of Commission V of the Indonesian House of Representatives, Suryadi Jaya Purnama, when contacted, admitted that he was optimistic that the presence of the task force to reduce airline ticket prices might work effectively, as long as there was full support from airline companies and other stakeholders.
“What is important is that airlines are open in setting prices,” he said.
He also understands the airline’s desire to ask for an increase in TBA for plane tickets because the aviation industry is burdened by the increase in avtur prices and the weakening of the rupiah exchange rate. The TBA regulation has never been revised since five years ago.
“Initially, the regulation (TBA/TBB) was to protect airlines due to the small number of passengers, but now that the volume is normal, prices should also be normal,” he concluded.
Previously, Coordinating Minister for Maritime Affairs and Investment (Menko Marves) Luhut Binsar Pandjaitan revealed that the government has prepared several effective steps to lower the price of plane tickets that many people have complained regarding because they are high. Compared to ASEAN countries and countries with high populations, Indonesia’s flight ticket prices are the second most expensive following Brazil. (Z-8)
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