The government has decided to lower the price ceiling on airfares before the Idul Fitri holiday. (Antara Photo/Fikri Yusuf)

Gov't to Cut Flight Prices by 12-16 Percent

MAY 14, 2019

Jakarta. The government has finally decided to lower the price ceiling on airplane tickets by 12 percent to 16 percent. This will undoubtedly reduce the costs of air travel ahead of the busy mudik exodus during Idul Fitri holiday.

Airfare cap on busy routes in and out of cities in Java will be lowered by 16 percent, Coordinating Minister for Economic Affairs Darmin Nasution said on Monday. Routes with lower traffic volume will get lower cuts. 

Flight prices have been on the rise since the end of last year after the government raised the airfares' floor price, the first time it did so since 2014.

Flag carrier Garuda Indonesia and the Lion Air Group, which virtually control the domestic air travel market, responded by increasing ticket prices and started charging for checked-in baggage.  

The move has been aggravating the travel and hospitality industries as well as customers. But the airlines have refused to budge, arguing that increasing operation costs have made airfare hikes unavoidable.

According to Darmin, the price of jet fuel rose to its highest in four years at $86 per barrel in December but has plateaued since.

"The government made this decision taking into account not only the interests of the airlines but also the consumers as a community," Darmin said after meeting officials from the Transportation Ministry, State-Owned Enterprises Ministry and Garuda Indonesia.

The Transportation Minister is scheduled to sign the new airfare limit regulation on Wednesday. 

Darmin said the government will revise the price cap on a regular basis to strike a balance between consumer protection and airline business sustainability.