JAKARTA: Domestic airlines have urged the government to raise the ceiling on economy-class airfares, citing surging fuel costs and a weakening rupiah that are squeezing margins and threatening connectivity.
“Geopolitical tensions in the Middle East have yet to ease, continuing to affect the aviation industry both globally and domestically,” Denon Prawiraatmadja, chairman of the Indonesia National Air Carriers Association said in a statement on Tuesday.
“We urge the government to reconsider the decision to delay discussions on the upper fare limit and to promptly begin revising the cap for domestic economy-class routes, with a more flexible mechanism that reflects increases in avtur [aviation turbine fuel] prices and the US dollar against the rupiah,” he added.
Avtur prices at Soekarno-Hatta International Airport rose to 27,358 rupiah per litre for May period, up 16% from 23,551 rupiah per litre in April and more than doubling from 13,656 rupiah in March.
Fuel typically accounts for 30% to 50% of an airline’s operating costs, making carriers highly sensitive to energy price swings.
Iran has been blocking nearly all shipping vessels in the Strait of Hormuz apart from its own for more than two months, with no signs of a deal to end the war, which has caused the biggest disruption ever to global energy supplies.
Domestic avtur prices have surged not just because of the fallout from the United States-Israeli conflict with Iran, but also as the weakening rupiah amplifies imported fuel costs.
The rupiah has weakened to around 17,425 rupiah per US dollar at Tuesday’s close, surging after touching its lowest-ever level of 17,300 rupiah and around 17,000 rupiah in early April.
“With airlines’ finances again under pressure from higher fuel costs and a stronger US dollar, this could disrupt air connectivity, related sectors and the broader economy,” Denon added.
The current mechanism for adjusting fuel surcharges, set on a fixed 60-day schedule under Ministerial Decree 83/2026, no longer reflects market realities, he said, and urged authorities to tie adjustments to movements in Pertamina’s avtur prices.
The association also asked the government to accelerate the implementation of a 0% import duty policy on aircraft spare parts, calling for closer coordination between the Transportation Ministry, Industry Ministry and Finance Ministry to ease cost pressures.
The push comes as Transportation Minister Dudy Purwaghandi previously stated that there are no immediate plans to adjust the upper fare limit for domestic economy-class tickets. — The Jakarta Post/ANN
