Just who will benefit from minimum airline fares?
Leony Aurora, The Jakarta Post, Jakarta
There was nothing luxurious about the flight Bonar Siahaan took from Medan to Jakarta four years ago. Unable to afford a commercial airline ticket at Rp 1.1 million (US$119.56), he opted to ride in an Army Hercules plane for one-third of the price.
Passengers sat on two long benches facing each other -- not unlike the public minivans in Jakarta -- through the seven-hour flight, with stopovers in several cities. As the plane also transported goods, "I sat on a box," said Bonar with a small laugh.
Those days are far behind now. With the blossoming of low-fare airlines in the country, Bonar can relax on his cushioned seat for the normal two hours it takes for a flight between the two cities, albeit without food and beverage services, for between Rp 300,000 and Rp 450,000.
The 38-year-old may have to pay higher prices next year as the government is mulling over a plan to require a minimum fare for airlines.
Members of the Business Competition Supervisory Commission (KPPU) Syamsul Maarif questioned the reasons behind the Ministry of Transportation's possible plan.
"Is it a concern for safety? Our studies show that there is no direct correlation between price and safety," he said.
Such a concern emerged particularly after the deadly crash of an aircraft of the country's leading budget airline, Lion Air, in Surakarta, Central Java, just a few ago, which took 26 lives.
"If the motive is to protect (airline) operators that are not willing to give low prices, then the policy sides only with those operators' interest," Syamsul commented.
Speaking in a similar tone, spokesman for Lion Air Hasyim Arsal Alhabsi said the plan would challenge people's need.
"Low ticket prices creates high mobilization within the society and a better distribution (of goods and expertise) within the vast archipelago," he said.
Bonar uses the cheap fares to avoid the tough competition in the insurance business in Jakarta, where he lives, in a bid to expand to his hometown Medan. He travels there twice a month to sell insurance.
"If prices go down further, I can go every week," he said. New budget carrier Awair, partly owned by Southeast Asia's leading budget airline AirAsia, offers a single trip to Medan for as low as Rp 88,000.
"Airlines have many price categories, and the lowest is usually for a limited number of seats," said Syamsul. It was still unclear, he said, what the floor prices would determine -- the lowest price an airline could offer, an average of the combined prices of all the seats in the plane, or some other combination.
As reported by the media, the transportation ministry is considering floor prices at 30 percent of the ceiling fares, as stipulated by ministerial decree No. 9/2002.
For the Jakarta-Medan route, covering 1,495 kilometers in distance, the ceiling fare is Rp 1.27 million, and so the floor price in that case would be Rp 381,300.
Spokesman for flag carrier Garuda Indonesia, known for its full-service flights with higher ticket prices, Pudjobroto claimed that floor fares were needed to ensure healthy competition.
"The airline industry has a clear cost structure of fuel, maintenance and plane leasing," he said.
Pudjobroto said that instead of not having floor fares, the government should scrap ceiling fares, as the airline business was all about services. "Price measures service," he said.
Bonar did not completely agree. "What I want is a safe and cheap flight. I don't care if I have to stand the whole way, as long as I get there safely and in good time."