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)