INACA wants government to hike domestic airfares

INACA wants government to hike domestic airfares

JAKARTA (JP): The Indonesian National Air Carriers Association
(INACA) wants the government to raise domestic economy airfares
gradually, and in real terms, not just to adjust fares to the
rupiah's depreciation against the U.S. dollar.

INACA's secretary-general, Benny Rungkat, said here yesterday
that airfares in Indonesia were much lower than in other
countries.

"With the current airfares, many airlines have problems
maintaining their fleets," Rungkat said as quoted by Antara.

Economy airfares are set by the government.

Airfares are regularly adjusted every six months to rupiah
rates against the U.S. dollar, based on ministerial decree No.
20/1996.

Minister of Transportation Haryanto Dhanutirto said last week
that INACA might raise domestic airfares soon because of the
recent rupiah drop against the dollar.

"The government has allowed INACA to raise airfares. One of
its aims is to make airlines more financially able to add to and
maintain their fleets," Rungkat said.

Current domestic airfares were set at an average of 11 U.S.
cents per seat per kilometer, he said. "But with the 11 to 13
percent drop in the rupiah against the U.S. dollar, the real
value of the current rate has dropped by 1.5 U.S. cents to 9.5
U.S. cents per seat per kilometer," he said.

Based on a report compiled by the International Civil Aviation
Organization in 1991, in Africa, airfares are set at 27.5 U.S.
cents per seat per kilometer (to a 25-km distance), 21.5 U.S.
cents (500 km), 18.7 U.S. cents (1,000 km), 15.9 U.S. cents
(2,000 km and 3,000 km).

In South America, airfares are 22 U.S. cents (to 250 km), 18.8
U.S. cents (500 km), 16.2 U.S. cents (1,000 km) and 12.7 U.S.
cents (2,000 km and 3,000 km),

European airfares are 54 U.S. cents (to 250 km), 40.7 U.S.
cents (500 km), 30.7 U.S. cents (1,000 km), and 23.2 U.S. cents
(2,000 km and 3,000 km).

Airfares in the Asia-Pacific region are 25.5 U.S. cents (to
250 km), 20.3 U.S. cents (500 km), 20.1 U.S. cents (1,000 km) and
15.5 U.S. cents (2,000 km and 3,000 km).

"In Indonesia, according to ICAO, the airfares are 10.8 U.S.
cents (to 250 km), 6.9 U.S. cents (500 km), 7.7 U.S. cents (1,000
km) and 8.8 U.S. cents (2,000 km and 3,000 km)," Rungkat said.

He said the low rates meant Indonesia's air carriers would
always have difficulties allocating funds for fleet purchases.
"Airfares are also too low to cover the high cost of aircraft
maintenance."

There are six scheduled air carriers in Indonesia, Garuda
Indonesia, Merpati Nusantara, Sempati Air, Bouraq Airlines,
Mandala Airlines and Dirgantara Air.

Rungkat said that the airlines, which earned in rupiah, had
frequent problems because most of their spending was done in
dollars.

About 70 percent of the airlines's costs had to be repaid in
dollars, he said.

"INACA will urge the government to raise domestic economy
airfares gradually over a five year period, until the rates reach
an average 16 U.S. cents per seat per kilometer."(icn)