PT KAI seeks limit on airline price war<\/p>\n
Yuli Tri Suwarni, The Jakarta Post, Bandung, West Java<\/p>\n
State railway company PT Kereta Api Indonesia (PT KAI) has
\nstrongly urged the government to limit the ongoing price war
\nbetween domestic airlines, which has had a domino effect on the
\ncompany.<\/p>\n
PT KAI spokesman Patria Supriyoso said here on Friday that if
\nthe government established a minimum price for all domestic
\ndestinations instead of leaving it to the market, PT KAI would be
\nable to recover from the difficult conditions faced by executive
\ntrain services in Java.<\/p>\n
\"Ticket prices have been a decisive factor for travelers when
\ndetermining their choice,\" he said, when awarding prizes to
\nsenior high school students who had won a contest related to the
\nrailways, in a ceremony here on Friday.<\/p>\n
Patria argued that the price war between airlines for domestic
\ndestinations could no longer be tolerated, as prices had dropped
\nso much, thereby affecting PT KAI's income.<\/p>\n
He said that prices had fallen drastically by around 30
\npercent last year, and again by almost 50 percent earlier this
\nyear.<\/p>\n
For example, the price of a one-way ticket for the Jakarta to
\nYogyakarta route had dropped to Rp 470,000 in the second half of
\n2002, from more than Rp 600,000 in the first, while it fell
\ndrastically again to Rp 225,000 earlier this year.<\/p>\n
\"Obviously, travelers will prefer to fly, as PT KAI charges Rp
\n250,000 per person for the same journey,\" he said.<\/p>\n
The price war broke out following the start of new airlines
\noperating beside established ones over the last three years.<\/p>\n
The air ticket price war has also affected sea and land
\ntransportation. The mushrooming of airlines serving the Jakarta
\nto Medan route has caused state-owned airlines Garuda and Merpati
\nto cut their price to Rp 550,000 at present, from Rp 850,000 in
\nMarch and Rp 1.2 million last year. New airlines, such as Jatayu
\nAir, Batavia Air and Lion Air, charge Rp 380,000 for the same
\njourney.<\/p>\n
Many travelers to and from Medan have flown on the new
\nairlines, as state-owned ship operator PT Pelni has set a price
\nof Rp 280,000 for economy class and bus operators charge Rp
\n310,000 for economy class.<\/p>\n
Patria said the decline in the number of passengers on
\nexecutive trains had reached 50 percent on the Jakarta to
\nSurabaya route.<\/p>\n
\"The company's income from noneconomy-class trains, which had
\nbeen a source of financial support for economy-class trains, has
\nalso dropped by 80 percent,\" he said. It was therefore impossible
\nfor noneconomy-class trains to generate a cross-subsidy for
\neconomy-class trains amid the price war.<\/p>\n
Economy-class trains run at a loss, in order to ensure that a
\nservice for low-income people is maintained, as required by the
\ngovernment.<\/p>\n
\"Due to the price war, PT KAI has suffered a loss of potential
\nincome of Rp 7 billion per month. Over the last four months, PT
\nKAI has suffered a total loss of potential income of Rp 28
\nbillion,\" he said.<\/p>\n
He added PT KAI had also started an efficiency drive, to keep
\noperational costs as low as possible, and had reduced service
\nfrequencies on less well-used routes.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pt-kai-seeks-limit-on-airline-price-war-1447899208",
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