Airfares hike demanded after fuel prices rise

Airfares hike demanded after fuel prices rise

JAKARTA (JP): The Indonesian National Air Carriers Association
(INACA) has demanded another raise in domestic airfares following
the government's move to increase jet fuel prices.

The association's secretary general Benny Rungkat said on
Friday airfares should be increased to enable the local airline
companies to offset higher operational costs resulting from the
increase in jet fuel prices.

"We need to have a raise to help us weather the storm
battering the domestic airlines industry," he was quoted by
Antara news agency as saying.

The government increased the jet fuel price from Rp 600 (US$
0.07) to Rp 1,060 (US$ 0.12) per liter, effective on Feb. 5.

The government last increased domestic airfares by 40 percent
to Rp 753 per kilometer per seat based on the assumption of Rp
10,600 to the U.S. dollar on Sept. 1, 1998.

The fuel cost is 20 percent of an airline's total operating
cost, he said.

Benny said that the rupiah's sharp fall against the U.S.
dollar and the economic crisis had already hurt the country's
airline business badly.

He said that local airline operators had to close some of
their international and domestic routes and also had to return
their leased aircraft or sell part of their own fleet to enable
them to survive the crisis.

Benny said that the increase in the jet fuel price would
further hurt the already weak airline industry if the government
did not raise airfares.

The country's airlines receive their income in rupiah while 80
percent of their operating costs are quoted in dollars.

The country has six commercial airlines -- the state-owned
Garuda Indonesia and Merpati Nusantara Airlines, and the private
Bouraq Airlines, Mandala Airlines, Dirgantara Air Services and
Sempati Air. Sempati was forced to stop operations in June last
year as a result of the crisis. (02)