Garuda may halt tariff hike plan

Garuda may halt tariff hike plan

JAKARTA (JP): National flagship carrier Garuda Indonesia said
Monday it would maintain its airfares for domestic routes at the
current level if the rupiah's value continues to strengthen
against the U.S. dollar.

The airline's president, Robby Djohan, said Garuda would not
have to raise the domestic flight rates in December as planned
earlier this year, if the rupiah continued to stay at the current
level of between Rp 7,000 and Rp 8,000 to the U.S. greenback.

"We don't need another rise in December, because at the
current tariffs, we are not profiting much nor are we losing too
much," Robby told reporters after the signing of an agreement by
the Sahid International Hotel Management and Consultant with the
hotel's new partner Saudi Arabia's Badr Trading & Contracting
Est.

The current domestic airfares of all the five operating
scheduled airlines in the country have been set assuming an
exchange rate of Rp 10,000 per dollar, a huge increase from the
rate of Rp 5,000 which was used when the last round of fare
increases was calculated.

The Association of Indonesian Airlines (INACA), which groups
the five commercial airlines, has planned to raise the fares by
14.5 percent on Dec. 1 to Rp 862 per kilometer per seat from Rp
753 per kilometer per seat set last September.

The rupiah strengthened to around Rp 7,000 last week, after
falling to a historic low of over Rp 17,000 earlier this year
from around Rp 2,500 in August 1997.

On Monday the rupiah closed at Rp 7,400 per U.S. dollar after
reaching an intraday low of 8,000 in the morning.

Robby said Garuda might even lower its domestic airfares if
the rupiah continued to strengthen to between Rp 6,000 and Rp
7,000 to the U.S. dollar.

"If the (rupiah's) exchange rate strengthens again, we will
adjust it. We may reduce the rates, because our tariffs depend
much on our operating costs, which are mostly in U.S. dollars,"
he said.

Robby stressed the importance of having a stable exchange rate
in order to help the airline industry with a business indicator.

"The most important thing is not to have a high or low
exchange rate, but for it to be more stable because it is
important to have a stable indicator," he said. (das)