WNAM REPORT: Indonesia’s Ministry of Tourism and Creative Economy has received input from the CEO of Capital A Berhad, the parent company of AirAsia airline, Tony Fernandes, regarding domestic flight ticket prices.
“We have received input from Tony Fernandes from the media, and the input itself has become our finding,” Tourism and Creative Economy Minister Sandiaga Uno remarked on Tuesday.
Uno then outlined the three factors burdening the aviation industry, namely taxes, duties, and aviation fuel.
Uno, who is involved in the Task Force for reducing flight ticket prices, highlighted that cross-ministerial efforts are being made to lower the prices of flight tickets in Indonesia by the end of October to make them more affordable.
“By the end of October, we hope that ticket prices can be more affordable. At least 10 percent is our initial target,” he remarked.
Earlier, Fernandes drew attention to several obstacles faced by airlines to provide affordable domestic flight tickets in Indonesia, including the high price of aviation fuel, which was 28 percent higher as compared to other ASEAN countries.
“The aviation fuel price in Indonesia is the highest in ASEAN, at around 28 percent higher,” he noted.
In fact, the aviation fuel tariff in Indonesia is relatively more expensive as compared to other countries in the world.
He pointed out that the lack of competition for jet fuel providers in Indonesia was a contributing factor.
Fernandes also drew attention to a double tax imposed on domestic flights, namely tax levied on aircraft fuel and on passenger ticket prices.
His side also suggested putting an end to import duties for aircraft spare parts to significantly reduce the airline’s operational cost structure.
He then called on the Indonesian government to review the upper limit tariff policy for domestic flight tickets.
According to Fernandes, this limit review can offer greater flexibility for airlines in setting prices based on demand and dynamic operational costs while encouraging healthy competition in the aviation industry.
