Garuda hold off on fare hike despite fuel increase

Garuda hold off on fare hike despite fuel increase

JAKARTA (JP): The national flag carrier Garuda Indonesia will
not raise its airfares despite the recent increase in jet fuel
prices, the airline company's president Abdul Gani said.

"At present, Garuda has no plan to raise airfares despite the
fact that our operating costs have risen by 7.5 percent following
the recent increase in jet fuel prices," he said at a hearing
with the House of Representatives Commission IV for public works,
transportation, tourism, communications and public housing.

He said the company would seek to improve its efficiency to
compensate against rising operating costs.

Garuda feared a rise in airfares -- at a time when the country
was still experiencing economic turmoil and a public with reduced
spending power -- would result in a reduction of passenger
numbers.

"If airfares are raised (during this period of) depleted
spending power, no one will go by planes," Gani told Antara.

The government increased the jet fuel price from Rp 600 (US$
0.07) to Rp 1,060 ($0.12) per liter, from Feb. 5.

It last increased domestic airfares by 40 percent to Rp 753
per kilometer per seat, based on the calculation of Rp 10,600 to
the U.S. dollar, on Sept. 1, 1998.

Secretary-general of the Indonesian National Air Carriers
Association Benny Rungkat has demanded a raise in domestic
airfares following the government's move to increase jet fuel
prices.

"We need a raise (in airfares) to help us weather the storm
battering the domestic airline industry," Benny said.

According to Benny, fuel costs comprises 20 percent of an
airline's total operational budget. Benny acknowledged that
Garuda obviously had its own reasons for maintaining the current
airfares.

Gani said the association was yet to consult with its members
regarding the demand.

The country has six commercial airlines -- Garuda Indonesia,
Merpati Nusantara Airlines, Bouraq Airlines, Mandala Airlines,
Dirgantara Air Services and Sempati Air. Sempati was forced to
cease operating in June last year due to the 19-month-long crisis
which has battered the country.

Meanwhile, airline Merpati Nusantara has reportedly terminated
services on its Denpasar-Melbourne and Denpasar-Perth routes, as
part of its efforts to cope with rising costs.

Several analysts fear Merpati's move will lead to a drop in
the number of tourist arrivals from Australia, which thus far
comprise the largest segment of the Bali tourist market.

However, chairman of the Indonesian Association for Hotels and
Restaurants in Bali I Gede Wiratha believed Australian tourists
would keep coming to Bali due to its proximity to the island.

"Going to Bali is cheaper than going to Thailand," he told
Antara.

Nevertheless, he regretted Merpati's decision to cut services
to Australia, saying the policy would cause the airline to
forfeit "a huge potential profit". (jsk)