The number of domestic air travelers in Indonesia has plummeted 28 percent since last year. (Antara Photo/Muhammad Iqbal)

Gov't Prepares New Policies to Tame Skyrocketing Airfares


JUNE 21, 2019

Jakarta. The government plans to lower minimum airfares on certain routes, cut fuel price and offer fiscal incentives to airlines starting next week in its latest attempt to keep a lid on the skyrocketing cost of air travel. 

The government raised the floor and ceiling prices of airplane tickets last year, a move that resulted in soaring airfares. On some routes, tickets cost twice as much after the policy was applied.

On average, the cost of air travel has gone up 28 percent since last year.

"Since November 2018, the [soaring] cost of air travel has contributed to inflation every month," Coordinating Minister for Economic Affairs Darmin Nasution said in a statement on Thursday. 

The number of air travelers has also plummeted 28 percent since last year.

Darmin said the government has prepared several steps to solve the problem. 

Next week, the government will cut airfares offered by low-cost carriers on certain routes. This policy will impact Lion Air, the country's largest budget airline, and Citilink Indonesia, a subsidiary of flag carrier Garuda Indonesia, and also smaller budget airlines. 

Airlines, airport operators and fuel suppliers have also made a commitment to cut prices, Darmin said. 

In exchange, the government has promised several fiscal incentives, ranging from subsidies to tax cuts, for the airlines. Subsidies will be available for services and repairs, airplane rent, and importing airplanes and their spare parts.