Garuda to raise ticket prices 100 percent

Garuda to raise ticket prices 100 percent

Tony Hotland, The Jakarta Post/Jakarta

Garuda Indonesia airlines is planning to introduce a new
surcharge on tickets amid the soaring global oil prices that are
advancing toward the US$50 level and seriously affecting the
price of jet fuel, but others have taken a wait-and-see approach.

The National flag carrier Garuda is set to introduce a 100
percent price hike starting Sept. 15 on selected international
routes until further notice.

"The hike will be applied after Sept. 15 on flights to Japan
and Australia because now, we're fully booked until the end of
the month since it's a holiday season," Garuda business manager
Bachrul Alam told The Jakarta Post on Friday.

Garuda added in June a US$5 surcharge per flight on selected
international routes.

"Honestly, we must increase the surcharge now, but it would be
odd if we did it in the middle of this situation," he said,
adding that Garuda had also been cutting costs in all departments
to keep production efficient.

Merpati Nusantara Airlines vice president Toto Nursatyo said
that Merpati was keeping its options open, but did not want to
make a hasty decision and risk losing passengers.

"We're still examining what may happen next and also what
other airlines do. But I'm quite sure that most airlines here, if
not all, are already crying over the current oil prices," he told
the Post, adding that fuel now accounted for 40 percent of
Merpati's total costs.

Merpati introduced new fares in June on all of its domestic
and international routes. The fares varied from 5 percent to 10
percent higher than the original ones.

"Of course, it would be bad for business if we're the only one
raising fares. We'll try to increase flight frequency as it could
help compensate for higher costs," Toto said.

However, the country's biggest low-frills carrier Lion Air
stated that they would not impose a surcharge because they were
still making a nice profit.

"We're still making a profit although it's declining. We have
faith that the oil prices will go back to normal like history has
always shown," Lion spokesman Hasyim Arsal Alhabsi said.

Lion did not follow suit when some major domestic carriers
started imposing surcharges a couple of months ago as they said
they had already predicted the soaring oil prices.

Hasyim said Lion was able to cut a large amount of costs each
month by ending its contract with software producer PT Abacus, as
well as cutting the costs of catering and other internal costs.

"Besides, if we did incur a loss, the strategy would be how to
keep the loss as low as possible. Raising fares would definitely
cause a much bigger loss," he affirmed.

Jet fuel, or aviation turbine fuel (avtur), for August costs
Rp 3,179 (34 U.S. cents) per liter, up from Rp 3,047 per liter in
July.

A number of airlines in the Asia-Pacific region, including
Singapore Airlines and its regional carrier SilkAir as well as
Australia's Qantas Airways, have started applying fuel surcharges
to offset surging crude oil prices.

Carriers that have not hiked their price include Japan Air
Lines, Pakistan International and Malaysian Air, since those
carriers already increased their fares.