INACA slams antimonopoly watchdog's move

JAKARTA (JP): The Indonesian National Air Carriers Association (INACA) criticized the country's antimonopoly watchdog's moves to revoke INACA's right to set fares for domestic airline tickets.

INACA chairman Wahyu Hidayat said on Friday he was not sure if other agencies had sufficient knowledge on the airline industry and thus set too low a fare.

If plane fares are too low, the country's airlines would protest and demand a subsidy from the government, he warned.

"Setting fares at below market level would threaten the airline industry.

"If this happens, airlines will ask for a subsidy," Wahyu was quoted by Antara news agency as saying.

The Business Competition Supervisory Commission (KPPU) earlier charged that the right to set plane fares granted by the government to the association was in violation of the 1999 antimonopoly law.

KPPU chairman M. Iqbal said the commission had sent a letter urging the government to revoke that right.

Iqbal said plane fares should be decided by the government based on the recommendation of a team representing the government, airline industry and INACA.

"It is important the authority (to determine fares) is not held by the airline industry," he said in a hearing with the House of Representative's Commission V for industry and trade affairs on Wednesday.

The legislators agreed with KPPU.

Wahyu denied the antimonopoly team's allegations that INACA functioned as a cartel by determining plane fares.

"INACA does not determine plane fares, only the floor and ceiling exchange rate for tickets ... the fare is determined by each airline," Wahyu was quoted by Antara as saying.

The standard exchange rate for domestic airline tickets is determined by INACA, while the passenger fare per kilometer is determined by the government, he said.

Currently the passenger fare per kilometer is 11 U.S. cents.

Wahyu said the standard exchange rate was set to enable airlines to determine their own fares according to their operational capabilities.

The airline business is highly affected by the fluctuation of the rupiah against the U.S. dollar, he said, explaining that a domestic airline's earnings are in rupiah, while its operational costs are mostly in U.S. dollars.

"Every time the rupiah weakens, we domestic airlines, tremble," Wahyu, who is also the president of state-owned domestic airline PT Merpati Nusantara, said earlier.

Earlier this month INACA increased the standard exchange rate to between Rp 5,000 and Rp 9,000 to the U.S. dollar from between Rp 4,000 and Rp 7,500.

The association was forced to increase its standard exchange rate because the rupiah had fallen below Rp 11,000 to the U.S. dollar, he said.

Wahyu said KPPU should discuss with the Ministry of Communications, INACA and the Indonesian Consumers Foundation (YLKI), on the mechanism of setting plane fares and that INACA was ready to review existing fare setting mechanisms.

"Whatever policy is taken, the most important thing is not to kill the airlines and neglect passengers," he said. (tnt)