Aviation Fuel Prices Surge, Government Prepares Incentives to Stabilise Airfare Prices
The rise in aviation fuel prices, known as avtur, is beginning to affect travel ticket prices. State Secretary Minister Prasetyo Hadi stated that the global spike in avtur prices is unavoidable and is one of the main factors driving potential increases in flight fares.
“It cannot be denied that global avtur prices have indeed risen, and if we break it down with figures or percentages, the increase is quite significant. As a result of the avtur price hike, one of the impacts is the rise in, for example, air tickets,” said Prasetyo at the Presidential Palace Complex in Jakarta on Wednesday (8/4/2026).
According to him, the government is striving to find a balance between global energy price mechanisms and protection of public purchasing power as well as smooth high mobility.
He said that excessive increases in air ticket prices could pressure economic activity because they affect public movement and inter-regional economic distribution.
“The government is seeking formulas to achieve or find a balance between world oil market prices, but the impact should not, in quotes, be too great in affecting the public,” he explained.
As a mitigation step, the government previously set a subsidy policy to curb the surge in flight ticket prices. Through this policy, the government targets keeping air ticket price increases within controlled limits.
Previously, the government stated it would maintain domestic air ticket price increases in the range of 9-13 per cent. This policy was taken in response to the avtur price rise due to the conflict in the Middle East.
To hold back that increase, the government is preparing several mechanisms. First, tax incentives in the form of government-borne Value Added Tax (VAT) of 11 per cent for economy class tickets.
This policy will be implemented for two months and will be further evaluated following developments in the geopolitical situation in the Middle East. The second mechanism, the government provides import duty incentives of 0 per cent for aircraft spare parts components.
These incentives are estimated to boost economic activity by around $700 million per year, increase contributions to gross domestic product (GDP) by up to $1.49 billion, and create around 1,000 direct jobs.
Furthermore, the government is also adjusting the upper limit of the fuel surcharge or additional fuel cost. The government has set the upper limit of the fuel surcharge at 38 per cent for all types of aircraft, both jet-engine and propeller (propeller).