Government to Cover VAT on Economy Class Air Tickets to Suppress Prices

JAKARTA – The government is providing a tax incentive to suppress the rise in air ticket prices amid the surge in aviation fuel (avtur) costs. This policy is contained in Minister of Finance Regulation (PMK) Number 24 of 2026, which regulates Value Added Tax (VAT) borne by the government for economy class tickets on domestic flights. Through this regulation, VAT on the base fare and fuel surcharge is covered by the government, thereby reducing the ticket price burden paid by the public even as airline operational costs increase due to rising avtur prices. He stated that fiscal policy intervention is an important step to alleviate pressure on ticket prices, given that avtur prices account for around 40 percent of total airline operational costs. To ensure targeted implementation, Air Transport Business Entities are still required to report the utilisation of this VAT facility in an orderly and transparent manner. “This regulation is designed so that government support is truly felt by the wider public who need it most, while being managed effectively and sustainably,” said Haryo. Previously, the government had raised the upper limit of the fuel surcharge through Minister of Transportation Decree Number 83 of 2026 to 38 percent for jet and propeller aircraft. This figure is an increase from the previous 10 percent for jets and 25 percent for propellers. The combination of these policies is expected to maintain the affordability of ticket prices while supporting the sustainability of the national aviation industry amid global energy price challenges.