In response to escalating geopolitical conflict in the Middle East, particularly involving the US and Israel’s impact on Iran, the Indonesian government has rolled out a new policy package. One of the main steps is financial support. The government has set aside around Rp2.6 trillion aviation subsidy to cover value added tax through a government borne scheme at 11 percent.
This aviation subsidy is designed to keep airline ticket price increases within the range of 9 to 13 percent. The program will run for two months. The focus is crystal clear. Keep the aviation industry stable while preventing sharp increases in ticket prices.
This comes after earlier cost pressures had already built up. Fuel surcharges were raised to an average of 38 percent for both jet and propeller aircraft. Previously, those figures were set at 10 percent and 25 percent, based on the upper tariff limits from 2019.
Fuel prices are also moving upward. According to Pertamina, aviation fuel prices have increased across all airports in Indonesia starting April 1, 2026. The change applies to both domestic and international flights.
At Soekarno Hatta International Airport, the difference is significant. For domestic flights in April 2026, aviation fuel is priced at Rp23,551.08 per liter. Just a month earlier, in March, it was Rp13,656.51 per liter.
To ease the burden on airlines, the government is also allowing more flexible payment arrangements between airlines and Pertamina. These are handled through business to business agreements with specific terms.
Another key move targets operational costs directly. Import duties on aircraft spare parts have been reduced to zero percent.
“Furthermore, to maintain and enhance the competitiveness of the aviation industry ecosystem, the government is also providing incentives by reducing import duties on aircraft spare parts to zero percent,” said Coordinating Minister for Economic Affairs Airlangga Hartarto.
This reduction is expected to lower airline expenses. It also supports the broader aviation ecosystem.
Airlangga pointed out that import duties on aircraft spare parts reached around Rp500 billion last year. Removing this cost could have a wider impact.
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“This policy is expected to strengthen the competitiveness of the MRO (maintenance, repair, and overhaul) industry, with the potential to increase economic activity by around $700 million per year. It could also contribute up to $1.49 billion to GDP output and create around 1,000 direct jobs and nearly three times as many indirect jobs,” he explained.
The government plans to follow up with more detailed technical regulations. These will come in the form of Minister of Finance and Minister of Industry rules.
“All these policies are part of the government’s support for the sustainability of the national aviation industry, as well as maintaining economic activity that is efficient, effective, and resilient,” Airlangga added.
From the transportation side, the message is similar. Coordination has been key in handling rising costs.
Transportation Minister Dudy Purwagandhi emphasized that the increase in fuel surcharge was not decided alone.
“Following what has been conveyed by the Coordinating Minister for Economic Affairs, given the current unfavorable conditions, especially related to the global economy and geopolitics, one impact is the increase in aviation fuel prices. In determining the fuel surcharge, we have coordinated with all airlines operating in Indonesia, particularly domestic carriers, resulting in a 38 percent surcharge,” he said.
“We did not set the fuel surcharge unilaterally. This was the result of coordination and input from the airlines,” he added.
Taken together, these measures show how the government is trying to balance two things at once. Protect the aviation industry through the subsidy. And keep travel costs from rising too sharply for the public.
