INACA raises airfares by 37% after fuel hike

INACA raises airfares by 37% after fuel hike

JAKARTA (JP): The government has approved an Indonesian
National Air Carriers Association (INACA) proposal for a 37
percent increase in airfares, following the steep hike in fuel
prices.

The association's chairman, Soelarto Hadisoemarto, said
yesterday the increase would come into effect tomorrow and would
be applied to economy class domestic flights only.

Soelarto did not elaborate on the specific rate increases.

The government announced Monday that fuel prices would
increase by between 25 percent and 71.43 percent as of yesterday
to reduce subsidies and curb the state budget deficit.

Jet fuel was raised to Rp 600 from Rp 420 per liter, further
burdening ailing national carriers.

Fares for land and sea transportation also rose following the
fuel price rise.

Soelarto said the airfare increases were in line with a
regular six-monthly tariff adjustment conducted by the
association in line with the rupiah's fluctuation against the
dollar.

"The increase is not just to follow the fuel price hike but
also to adjust to the current exchange rates," Soelarto told The
Jakarta Post.

INACA increased airfares in December to adjust to the sharp
appreciation of the U.S. dollar against the rupiah.

The rupiah has dropped to 8,000 against the dollar from 2,500
last July.

Last year, the association postponed its adjustment until
October from the supposedly May, and increased the fares by
between 8 percent and 10 percent to adjust to the weakening
rupiah at the time.

The association increased the average fare to Rp 315.19 from
Rp 286.54 per kilometer for each passenger last December.

Local airlines are facing financial difficulties with rising
costs and an inability to service payments on their aircraft,
both of which are denominated in dollars. (das)