Domestic airfares raised after polls

JAKARTA (JP): The Indonesian National Air Carriers Association (INACA) plans to raise domestic airfares after the general election in June to adjust to increasing operational costs that have been driven up by a weakening rupiah.

The association's chairman Soelarto Hadisoemarto told The Jakarta Post on Tuesday the planned airline tariffs hike would follow an expected rise in jet fuel prices after the government removes subsidies on the fuel this year.

"After state-owned oil and gas firm Pertamina lifts the subsidies on aviation fuel, the price will surely be higher and our operational costs will increase," Soelarto said.

"So we will adjust our tariffs after the general election," he added.

The government has said it would scrap subsidies on jet fuel this month.

Soelarto said INACA had already gotten approvals from the government to increase in several phases the basic airfares to 11 U.S. cents per kilometer per seat from the current 7 cents.

The association would submit applications to the House of Representatives for approval soon after the election and would raise the domestic fares in several phases.

"We will take into consideration the condition of our economy at the time, and if it improves then buying power will strengthen too," he said.

"But if it sinks even deeper, I don't think anyone will be willing to pay more for an airline ticket."

The five currently operating local carriers last raised 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 in August.

The airlines' plan to raise airfares by a further 14.5 percent in December was postponed as the rupiah gradually strengthened to about Rp 7,500 to the dollar at the time.

However, fresh riots and external concerns have weakened the rupiah again recently, pushing it down to about Rp 9,100 to the U.S. dollar on Tuesday. (das)