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.