Government Covers VAT on Economy Class Flights to Suppress Ticket Prices

The government has officially issued Minister of Finance Regulation (PMK) No. 24 of 2026, which regulates the provision of value added tax (VAT) facilities borne by the government for the purchase of economy class aircraft tickets on domestic flights. This policy emerges as a strategic step by the government to dampen the surge in aircraft ticket prices impacted by the rise in global avtur prices. Through this policy, VAT on the base fare and fuel surcharge is borne by the government, thereby suppressing the prices that the public must pay even as airline operating costs increase. Haryo explained that this fiscal intervention is an important step given that avtur prices contribute around 40 percent to the total operating costs of airlines. With increasingly heavy cost burdens, airlines inevitably adjust fares. Therefore, the government is taking balancing measures to protect the public. To ensure this facility is implemented accountably, airlines are still required to report the utilisation of government-borne VAT in an orderly and transparent manner in accordance with tax regulations. In addition to the implementation of VAT facilities, the government previously also capped the increase in domestic flight fares at around 9 percent to 13 percent. This step is part of the government’s mitigation strategy in facing global energy price volatility. “The government is moving quickly to prepare strategic mitigation measures to maintain the sustainability of the national aviation industry while ensuring that aircraft ticket prices remain affordable,” added Haryo. To respond to avtur cost pressures, the government has also set fuel surcharge adjustments through Minister of Transportation Decree No. 83 of 2026, namely 38 percent for both jet and propeller aircraft. Previously, the fuel surcharge was set at 10 percent for jets and 25 percent for propellers. The combination of these policies, both PMK 24/2026 and the surcharge adjustment, is projected to provide room for airlines to operate optimally without excessively burdening the public. Amid the challenges of rising global energy prices, the government reaffirms its commitment to maintaining inter-regional connectivity while ensuring that the public continues to have access to affordable air transportation.