Indonesian Airlines Consider Fare Increases to Offset Falling Rupiah
As the rupiah continued its decline against the dollar, Indonesia's airlines are considering hiking their economy class fares to cover potential losses resulting from the devaluation of the currency.
Emirsyah Satar, the chairman of the Indonesia Air Carriers Association (Inaca), said that Inaca is still in the planning phase of a possible price increase.
"We are still discussing the matter. If we reach an agreement, we will announce it to the public," Emirsyah, who is also president director of national flag carrier Garuda Indonesia, told the Indonesian news portal tribunnews.com on Tuesday.
The rupiah's current devaluation has hit Indonesia's airline industry particularly hard because jet aviation fuel is pegged to the US dollar, he said.
Sriwijaya Air's commercial director, Toto Nursatyo, said that it was time for the government to revise the 2010 Transportation Ministry regulation, which stipulated a maximum tariff for economy class tickets and set aviation fuel prices at Rp 10,000 per liter.
Airlines should, however, stick with their current fares in the meantime.
Lion Air director Edward Sirait said that his airline had been burdened with increased maintenance costs since the rupiah began declining.
"The rupiah falling against the dollar has directly impacted fuel and maintenance costs," he told the Jakarta Globe on Wednesday.
Meanwhile, Bambang Ervan, a spokesman for the Ministry of Transportation, told the Globe that while the ministry had acknowledged that costs are rising for airlines, there have been no talks with Inaca so far.
"To determine if a new airfare will be instituted, we have to examine the situation first and ascertain whether or not the current slump will last long enough to warrant a tariff revision," he said.
He added that if prices continued to increase, the ministry would evaluate the 2010 regulation.
"The Transportation Ministry must pay attention to both operators and airline users," he said "Both interests must be balanced.
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