Government Seeks Ways to Curb Surge in Airfare Prices as Avtur Costs Skyrocket

The government is moving to contain the rise in domestic airfare prices amid a global surge in avtur prices that is pressuring airline operating costs. This action is being taken to prevent flight tariffs from soaring too high and burdening the public. State Secretary Minister Prasetyo Hadi stated that the increase in global avtur prices represents a real pressure that is difficult to avoid. According to him, the surge has a direct impact on the potential rise in airfare prices. “It cannot be denied that global avtur prices have indeed risen, and the increase is quite significant. One of its impacts could drive up airfare prices,” said Prasetyo, quoted from Antara on Wednesday. He emphasised that the government is now seeking a balance between global energy price volatility and protecting the public’s purchasing power. The government is also considering broader impacts on public mobility and inter-regional economic activities. According to Prasetyo, airfares rising too high risk suppressing public movement, disrupting economic distribution, and weakening business activities that rely on air connectivity. Therefore, the government is preparing several formulas to ensure that the pressure from rising global oil prices is not entirely passed on to the public. The focus is on keeping the impact on the public under control. Previously, the government assured that the increase in domestic airfare prices would be kept within the range of 9 to 13 percent. This policy was adopted in response to the avtur price hike triggered by geopolitical tensions in the Middle East. To stem that rise, the government is preparing several instruments. First, tax incentives in the form of government-borne VAT of 11 percent for economy class tickets. This scheme will apply for two months and will then be evaluated according to developments in the geopolitical situation. Second, the government is providing zero import duty incentives for aircraft spare parts components. This policy is estimated to encourage economic activity of around 700 million US dollars per year, adding a contribution to gross domestic product of up to 1.49 billion US dollars, and opening around 1,000 direct jobs. In addition, the government is also adjusting the upper limit for fuel surcharge or additional fuel costs. The upper limit for fuel surcharge is now set at 38 percent for all types of aircraft, both jets and propellers. With a combination of subsidies, fiscal incentives, and adjustments to fuel cost policies, the government is striving to ensure that airfare prices do not surge wildly amid the ongoing increase in global avtur pressures.