JAKARTA: Local airlines have welcomed the government’s move to allow airfares to increase up to 13% amid surging jet fuel (avtur) prices following the US-Israeli attacks on Iran.
However, experts warned that airlines need to be prepared for weaker demand following the policy.
National flag carrier Garuda Indonesia revealed that it will “adjust” airfares in line with the Transportation Ministerial Decree No 83/2026.
“This regulation is a strategic step in maintaining the balance between airlines’ operations and air transport service accessibility for the public, as well as supporting the economic stability in the national aviation industry,” said Garuda Indonesia chief executive officer (CEO) Glenny H Kairupan, in a statement.
Avtur prices have soared by over 70% following the outbreak of war in the Middle East, triggering a global energy crisis.
At Soekarno Hatta International Airport in Tangerang, the prices of aviation fuel jumped to 23,551.08 rupiah (US$1.38) per litre in April, from 13,656.51 rupiah in March.
As a response, government raise the aviation fuel surcharges, which are charged to consumers to cover fuel costs, from 10% for jet and 25% for propeller planes to 38% for both type of aircrafts, on Monday.
Around 2.6 trillion rupiah (US$151.6mil) has been earmarked to provide value added tax waiver on tickets and keep the overall increase at 9% to 13%, expecting the raise will not excessively hurt consumers.
Additionally, the government has exempted import duty on spare parts to ease mounting operational pressures in the aviation industry.
Amid the turbulence in the aviation industry, Glenny added that the firm was also preparing mitigation steps through an optimisation assessment of flight frequencies and schedules of several routes.
Garuda’s subsidiary and low-cost carrier PT Citilink Indonesia also announced similar measures to adjust ticket prices by taking into account the company’s ongoing operations, people’s spending power and prevailing regulations.
Citilink CEO Darsito Hendroseputro said in a statement that the company would adjust several flight schedules and frequency to “ensure that operations continue to run effectively, efficiently and sustainably”.
The company will also evaluate the adjustments regularly, Darsito said.
The Indonesian National Air Carriers Association welcomed the policy, saying it would be challenging for airlines to absorb the spike in jet fuel prices.
Experts, meanwhile, warned that airlines must brace for a decline in the country’s already weakening air travel demand.
Mohammad Faisal, the executive director of the Center for Reform on Economics (CORE), said that the number of air passengers had fluctuated compared to road, sea and rail transport over the past few years. — The Jakarta Post/ANN
