Airfare Increase Predicted to Suppress Passenger Numbers, Admin Fee Deemed Insignificant
The government has allowed airlines to increase domestic airfare by 9-13% due to the oil crisis stemming from the Middle East conflict, which has driven up domestic aviation fuel prices. Additionally, the government is reportedly set to abolish other cost components, such as admin fees for online bookings.
Regarding this, Revy Petragradia, a transportation expert from the Indonesian Transportation Society (MTI), stated that components like ticket distribution fees and admin fees only have a minor impact on the final price paid by passengers.
“Admin fees might have a slight influence, but it’s not significant. Airlines will adjust their base fares more substantially,” he said in his statement.
According to him, the primary pressure on ticket prices comes from the rise in aviation fuel costs, which account for up to 40%. The price has jumped from Rp 13,656 to Rp 23,551 per litre. As a result, this situation has prompted the government to introduce several incentives.
These include setting a fuel surcharge of 38% for all aircraft types, implementing value-added tax borne by the government (PPN DTP) at 11%, and reducing import duties on aircraft parts to 0%.
He conveyed that these steps are appropriate, as the structure of airfare includes four main components affecting rates: fuel surcharge, base fare, value-added tax (PPN), and operational costs (airport tax).
With the 9-13% ticket price increase, Revy predicts a decline in passenger numbers in the near term. He estimates that passenger projections could be pressured by 10-15%, especially amid unstable economic conditions.
“With a 9-13% increase, passenger projections will certainly be pressured by 10-15%, particularly given the current uncertain economic situation,” he explained.
He added that the business travel segment could also be affected, particularly due to government restrictions on official trips. Meanwhile, during long holiday periods, people are expected to still travel but tend to opt for short-distance journeys to curb expenses.
In the medium term, the main challenge for airlines is to maintain efficiency and optimise operations amid cost pressures and global uncertainty. Revy suggests that airlines begin developing more adaptive business strategies, including integrating flight services with the tourism sector.
“Not just selling tickets, but also combining them with hotel and tourism services in travel packages to make them more attractive and effective,” he said.