Inaca chairman Denon B. Prawiraatmadja speaks to the press at the Coordinating Ministry for Economic Affairs' office in Jakarta, on Thursday. (JG Photo/Nur Yasmin)

Airlines Demand One-Price Policy on Jet Fuel


DECEMBER 26, 2019

Jakarta. The Indonesian National Air Carrier Association, or Inaca, proposed a one-price policy on jet fuel on Thursday, citing sharp price disparity between the eastern and western parts of the country that could reach up to Rp 3,000 ($0.22) per liter.

Inaca chairman Denon B. Prawiraatmadja said members of the association were concerned about price disparities between regions that significantly added operating cost.

He said jet fuel prices and exchange rate fluctuation were the two major factors affecting the airlines’ operating cost. Jet fuel alone made up 30 to 40 percent of the total cost, he said after meeting Coordinating Minister for Economic Affairs Airlangga Hartarto at the latter’s office in Jakarta.

“We told the coordinating minister about jet fuel [price] disparity. The government also shares our concerns and we hope they will implement our inputs,” Denon said.

“We hope for equal jet fuel [prices] in the central, eastern and western parts of Indonesia,” he said. 

State-run oil company Pertamina holds the monopoly in the country’s aviation fuel supplies. However, Coordinating Minister for Maritime Affairs and Investment Luhut Pandjaitan said earlier this month the government considered inviting more jet fuel suppliers to put an end to the “unhealthy” monopolistic business.

Import Restriction

During the meeting with Airlangga, Denon also raised concern about import restriction on airplane parts.

“Indonesia imposes restriction on 47 percent of all imported airplane parts used by the aviation industry, while other countries such as Malaysia have a much lower restriction of about 17 percent,” he said.

“On behalf of the association, I conveyed our hope that this restriction can be relaxed,” he said.

Speaking separately, Airlangga said the government would take into considerations the proposed one-price policy on jet fuel.

Aviation fuel prices vary in several regions because of the different level of fuel supply infrastructures, he said.

“The infrastructures are different between eastern and western parts of Indonesia,” he said.

On airplane part import restriction, Airlangga asked Inaca to go into details. He said several companies certified to run airplane maintenance, repair and overhaul (MRO) services -- such as Garuda Maintenance Facility -- were exempt from such a restriction.

He also pointed to the MRO facility at the Hang Nadim Airport on Batam Island, a free trade zone where import restriction didn’t apply.

“I want them [Inaca] to be more specific about where they have problems with this restriction,” the minister said.