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)