Domestic airfares may be hiked due to weak rupiah

JAKARTA (JP): Domestic economy airfares may be increased because of the depreciation of the Indonesian rupiah against the U.S. dollar.

Minister of Transportation Haryanto Dhanutirto said Saturday that the Indonesian National Air Carriers Association (INACA) could raise airfares to cover increased operating costs due to the weakening of the rupiah.

"The government has decided that airfares could be adjusted by INACA in line with the dollar's exchange rate against the rupiah. That decision has been endorsed by the House of Representatives," Haryanto was quoted by Antara as saying in Bandung, West Java.

INACA chairman Soelarto Hadisoemarto said earlier last week that the association would increase domestic economy airfares to compensate for the higher operating costs.

"We will raise domestic airfares..., especially economy class fares," Soelarto said after a seminar last Monday. But he did not say how much the increase would be.

A decree signed by the transportation minister in April last year allows for domestic airfares to be adjusted automatically every six months in line with fluctuations of the dollar against the rupiah.

Haryanto said it was fair to automatically adjust airfares because domestic airlines bought aircraft and parts in U.S. dollars, while their revenue was mostly derived from rupiah.

With automatic adjustment domestic airlines could keep adding to and maintaining their fleets, he said.

"I don't want to hear an excuse that an airline could not maintain its aircraft properly because of low airfares," the minister said.

He contended that current airfares -- about 11 U.S. cents per seat per kilometer -- were actually competitive enough for domestic airlines to offset their operating costs.

The last fare increase was recorded in October, 1997, when the government approved INACA's proposal to increase domestic economy airfares by up to 4 percent.

Domestic airfares are still based on the levels set last October when the rupiah was Rp 2,372 against the U.S. dollar. The rupiah has depreciated to 2,590 today.

Under the October decree, jet airfares are Rp 285 (12 US cents) per passenger per kilometer for distances less than 600 kilometers (up 3.63 percent), Rp 278 for distances between 601 kilometers and 750 kilometers (up 3.34 percent), Rp 270 distances between 751 and 900 kilometers (up 3.05 percent), Rp 263 for between 901 and 1,050 kilometers (up 2.73 percent) and Rp 260 for over 1,050 kilometers (up 4 percent).

Non-jet airfares are Rp 398 (US$0.168) per passenger per kilometer for less than 150 kilometers (up 3.1 percent), Rp 389 for between 151 kilometers and 225 kilometers (up 3.18 percent), Rp 380 for between 226 and 300 kilometers (up 3.26 percent), Rp 370 for between 301 and 375 kilometers (up 2.77 percent) and Rp 356 for more than 375 kilometers (up 1.71 percent). (rid)