Aviation expert assesses that government-borne VAT on plane tickets helps curb ticket price surges

Jakarta (ANTARA) - Aviation expert Alvin Lie believes the government’s incentive policy for Pajak Pertambahan Nilai Ditanggung Pemerintah (PPN DTP) on economy-class plane tickets can curb price surges amid global avtur cost increases.

The 11 per cent government-borne VAT incentive at least helps alleviate the burden on passengers following the fuel surcharge hike since early April 2026.

Contacted by ANTARA in Jakarta on Monday, Alvin explained that the fuel surcharge adjustment has significantly raised jet aircraft fares. However, with PPN DTP in place, this increase can be moderated, making the passenger burden lighter.

For jet flights, the ticket price hike, initially estimated at around 25 per cent, has now dropped to 15-16 per cent after tax incentive compensation. Meanwhile, for propeller or turboprop aircraft flights, the impact is far more pronounced, with price increases being minimal at only about 1-2 per cent.

“This is certainly very beneficial for aviation service users on propeller planes, especially in eastern Indonesia,” he said.

Nevertheless, Alvin emphasised that the 100 per cent effectiveness of PPN DTP in suppressing fares and stimulating demand is still limited, as ticket prices overall continue to rise.

In his view, the incentive does not immediately boost passenger numbers or airline revenues. This is because the post-Lebaran period typically enters the low season, so price reductions are not strong enough to drive new demand.

“This incentive does not directly affect load factors or airline revenues much because ticket prices are still rising, especially for jet engines. And post-Lebaran is indeed entering the low season cycle,” Alvin explained.

“It benefits those who already have travel plans or needs, making it lighter. The avtur price increase is not too burdensome,” he added.

As is known, the government has issued Minister of Finance Regulation (PMK) No. 24 of 2026, which regulates the provision of PPN DTP facilities on economy-class domestic plane ticket prices.

Through this policy, VAT on base fares and fuel surcharges is borne by the government, thereby suppressing the ticket price burden paid by the public even as airline operational costs rise due to higher avtur prices.

“This facility applies to ticket purchases and flight executions for 60 days, starting one day after the date of promulgation,” said Coordinating Ministry for the Economy Spokesperson Haryo Limanseto in his statement in Jakarta.

Haryo explained that fiscal policy intervention is an important step to reduce pressure on ticket prices, given that avtur costs account for around 40 per cent of total airline operational expenses.

To ensure targeted implementation, airlines are still required to report the utilisation of these PPN facilities regularly and transparently in accordance with applicable tax provisions.