Flight tariff war

Flight tariff war

A flight tariff war can be seen on several domestic flight
routes today, especially the Jakarta to Surabaya journey.
Airlines serving that route, including Garuda Indonesia,
Indonesia Airlines and Star Airlines, have implemented tariff
strategies to attract passengers.

Indonesia Airlines has kept its airfare at below Rp 400,000
per seat and offered a special package. The company provides an
extra ticket for every two tickets purchased. Star Airlines has
lowered its airfare to Rp 484,000 per seat and Garuda Indonesia
has reduced its fare to Rp 499,000 per seat, below the normal Rp
670,000 price.

The low tariff strategy is perhaps very attractive because in
the current gloomy economic conditions, tariffs feature in
consumers' considerations in choosing transport services.
Therefore, we believe that the tariff war will expand to all
other flight routes.

It is very difficult to change the conservative taste of
consumers, who favor lower fares. So an increase in the flight
tariff can have a boomerang effect. Consumers will choose
alternative services that are competitive. In view of that
phenomenon, the tariff war can have an adverse impact on the
survival of air transport companies.

-- Neraca, Jakarta