Kemenhub Prepares Various Solutions to Reduce Airline Ticket Prices

Soekarno Hatta Airport

Airline fare prices went up some time ago. President Jokowi also explicitly reprimanded his ministers. Therefore, to reduce airline ticket prices, which are currently still expensive, the Ministry of Transportation (Kemenhub) has prepared several solutions.

Minister of Transportation Budi Karya Sumadi immediately moved after receiving directions from President Joko Widodo (Jokowi) to help control inflation in Indonesia, especially in the transportation sector.

“We have also sent a letter to the regional government to support connectivity by helping to ensure passenger occupancy levels, providing subsidies and other incentives,” he said in a press release, Thursday (18/9/2022).

He said the Avtur price did cause airline ticket prices to rise, but there was a management strategy that had to be coordinated in detail, so that ticket prices could remain under control and would not have the effect of rising inflation too high.

Budi said that in some areas, the aircraft occupancy rate is only 50 percent or even less. Therefore, local governments are encouraged to participate in providing subsidies and also participate in marketing, so that aircraft passenger occupancy increases.

“If the occupancy rate can increase, the price will be controlled, because the ticket price is directly proportional to the occupancy rate,” he said.

Meanwhile, several efforts have been made by the Ministry of Transportation to control ticket prices during rising global aviation fuel prices. This method includes, among others, setting a policy for imposing a non-tax state revenue (PNBP) rate of Rp. 0 or 0 percent for Aircraft Landing, Placement and Storage Services (PJP4U), which applies to the Airport Operator Unit (UPBU). This rule is contained in the Decree of the Director General of Civil Aviation No. 14/2022.

In addition, the Ministry of Transportation has asked the Ministry of Finance to impose a VAT relaxation on tickets and fuel (Avtur).

Previously reported, President Jokowi highlighted the recent increase in air ticket prices following the increase in aviation fuel prices. He asked that the number of aircraft operated could be increased immediately.

“In the field, I also hear complaints, ‘Sir, the price of plane tickets, sir, is high.’ I have reacted immediately, the Minister of Transportation, I have ordered this to be completed immediately,” said Jokowi at the 2022 National Inflation Coordination Meeting at the State Palace, Thursday (18/8/2022).

Furthermore, he also said that he had ordered SOE Minister Erick Thohir and Garuda Indonesia to immediately increase aircraft operations so that they could return to normal conditions.