Jet fuel prices rise, government prepares to raise the upper limit on airfares

The government is opening up the possibility of increasing the upper tariff cap (TBA) for air tickets in response to rising aviation operating costs caused by global geopolitical volatility. This was stated by Transport Minister Dudy Purwagandhi, who emphasised that discussions on the TBA are being conducted with airlines and other stakeholders to safeguard the sustainability of national air services. Dudy explained that the surge in avtur (aviation turbine fuel) prices is the biggest pressure on the aviation industry. The rise has significantly increased airlines’ operating costs, so in the short term the government will focus on adjusting the fuel surcharge as an additional charge on air tickets. ‘For the short term, with the airlines, they have already agreed that the fuel surcharge is what they most need to adapt to the rise in avtur,’ said Dudy. After the fuel surcharge policy is implemented, the government will continue discussions on adjusting the TBA. Dudy stressed that the possibility of raising the upper ticket price cap is very open. ‘Oh indeed, there is potential for discussion on the TBA of air tickets. For sure. Not lowering the TBA, but raising it,’ he said. Further discussions will involve airlines, the Ministry of Transportation, and the Coordinating Ministry for Infrastructure and Regional Development (Kemenko IPW), including other related ministries. Previously, Coordinating Minister for IPW Agus Harimurti Yudhoyono (AHY) also confirmed that the TBA adjustments would be made in a measured manner. He emphasised the importance of balancing the continuity of the aviation industry with the public’s ability to buy air tickets. ‘Hopefully there will be an improvement in the situation and air ticket prices will not unduly burden the public,’ AHY said. This condition directly affects the operating costs of the air transport sector, from fuel to the overall provision of national air services.