Airlines offering excessive discounts to face sanctions

Airlines offering excessive discounts to face sanctions

JAKARTA (JP): Six domestic airlines have signed a memorandum
of understanding here to confirm their May commitment of putting
an end to excessive discounting.

"No more excessive discounting will be allowed as of Nov. 1
and violators of the agreement will face severe sanctions,"
Director General of Air Transportation Zainudin Sikado told
reporters after witnessing the signing of the agreement on
Friday.

The agreement was signed by the director of Garuda Indonesia,
Kussuyono, the president of Merpati Nusantara Airlines, Ridwan
Fatarudin, the president of Sempati Air, Hasan Soedjono, the
president of Mandala Airlines, Soebagio, the president of Bouraq
Indonesia, J.A. Sumendap, and the president of Dirgantara Air
Service, Maki Perdanakusuma.

The six airlines, under an agreement signed in May, actually
agreed to stop offering the discounts as of July. But they
continued offering excessive discounts to travel agencies and
passengers.

Under the May agreement, discounts for travel agents should
have been limited to a maximum of seven percent. However,
domestic airlines are allowed to offer discounts of up to 15
percent to members of professional organizations attending
special conferences, 25 percent to students, 35 percent to
elderly people and 45 percent to veterans. Return tickets may get
a discount of up to five percent and tickets for tour packages 15
percent, while foreign tourists who use Indonesian airlines for
their domestic flights and employees of travel agents and
airlines can enjoy discounts of up to 50 percent.

The agreement requires airlines to pay a fine of up to Rp 10
million (US$4,666) for each violation of the agreement. The funds
collected from fines will go to the Indonesian Air Carriers
Association.

"Domestic air carriers should compete with each other and with
foreign airlines serving Indonesian destinations by improving
services, instead of introducing excessive discounts," Sikado
said yesterday.

He said the domestic airlines are also expected by the end of
this year to cooperate with each other to introduce endorsable
tickets to improve services to passengers.

The introduction of endorsable ticketing will also help
eliminate price wars among airlines because their ticketing
system will have to be synchronized, he said. (riz)