JAKARTA: Energy and Mineral Resources Minister Bahlil Lahadalia says despite the price hike on April 1, domestic aviation turbine fuel (avtur) is regionally “competitive” and still more affordable compared to other countries.
“Pertamina has indeed increased prices, but compared to aviation fuel prices in other countries, especially neighbouring countries, we are still much more competitive,” Bahlil told reporters on Monday, referring to the state-owned energy giant.
He said that avtur prices largely followed market mechanisms because of their direct link to the international airline industry.
Indonesian airports regularly refuelled foreign carriers, thereby tying domestic prices to global energy dynamics.
“Avtur prices are indeed market prices,” the minister said, adding that the government would continue to monitor global trends while ensuring that prices did not burden local carriers.
Pertamina raised avtur prices for both domestic and international flights on April 1. At Soekarno-Hatta International Airport in Tangerang, Banten, for instance, avtur prices for domestic flights increased 72.45% from 13,656.51 rupiah (81 US cents) per litre in March to rupiah 23,551.08 per litre in April.
Meanwhile, international flights have seen an 80.32% surge in jet fuel prices from 74 US cents to US$1.34 per litre.
The Indonesian National Air Carriers Association (INACA) initially proposed a 15% hike for both the fuel surcharge and the fare cap, but since jet fuel prices have risen more sharply than anticipated, it is now seeking further adjustments to reflect this.
“As we projected previously, avtur prices will rise following global trends due to the geopolitical crisis in the Middle East.
“Therefore, we urge the government to immediately adjust the fuel surcharge and domestic airfare ceiling,” INACA chairman Denon Prawiraatmadja said on April 2.
Industry observers have noted that maintaining competitive avtur prices is crucial for local airlines as well as pursuing Indonesia’s ambition to become a regional aviation hub.
In response, the government was allowing airlines to raise ticket prices by increasing the fuel surcharge while it waived certain aviation taxes, Coordinating Economy Minister Airlangga Hartarto told a press briefing in Jakarta on Monday.
More specifically, airlines have been granted leeway to hike ticket prices by introducing a fuel surcharge of up to 38% of the maximum fare cap.
The government also planned to introduce tax exemptions and other policy tools to control fares amid the ongoing Iran war, Airlangga said, highlighting that these “mitigation measures” aimed to ensure “that ticket prices remain affordable to people”.
Although airlines had requested a 50% fuel surcharge, the government settled on 38% as the ideal figure to preserve consumer purchasing power while helping carriers avoid heavy losses, according to Transportation Minister Dudy Purwagandhi.
Airlangga said the policy is effective for the next two months and thereafter was subject to further evaluation, pending developments in the Middle East. — The Jakarta Post/ANN
