Government Prepares Rp 2.6 Trillion Subsidy to Limit Airfare Increases to 9-13%

JAKARTA, KOMPAS.com - The government estimates that domestic airfares will rise by between 9% and 13% amid surging avtur prices due to global geopolitical dynamics. Coordinating Minister for the Economy Airlangga Hartarto stated that pressure on flight tariffs is unavoidable, as avtur, the main component of airline operating costs, continues to increase in line with global market prices. “With this combination of policies, the government is keeping the airfare increase within the 9 to 13% range,” Airlangga said during a press conference at the Coordinating Ministry for the Economy on Monday (6/4/2026). He explained that the avtur cost portion can reach around 40% of total airline operating costs, so rising energy prices directly impact airfare tariffs. Airlangga noted that avtur prices in Thailand have reached Rp 29,518 per litre and in the Philippines Rp 25,326 per litre, reflecting global pressure on the energy sector. One policy implemented is the adjustment of the fuel surcharge, or additional fuel cost. The government has set an upper limit for the fuel surcharge at 38% for all types of aircraft, both jets and propeller planes. Previously, the fuel surcharge limit for jets was 10% and for propellers 25%. With this new policy, the increase for jets is 28%, while for propellers it is 13%. In addition, the government is providing incentives in the form of Value Added Tax (VAT) borne by the government at 11% for domestic economy class air tickets. To support this policy, the government has prepared a subsidy budget of around Rp 1.3 trillion per month. According to Airlangga, this policy will apply for the next two months and will be evaluated according to developments in the global situation, including the conflict in the Middle East that affects energy prices. Furthermore, the government is preparing additional policies to maintain the competitiveness of the national aviation industry, including zero import duty incentives for aircraft parts. This step is expected to reduce airline operating costs while strengthening the domestic aircraft maintenance, repair, and overhaul (MRO) industry. Airlangga emphasised that all these policies are part of the government’s efforts to maintain a balance between the sustainability of the aviation industry and the affordability of airfares for the public.