Local airlines seek up to 47 percent rise in airfares

Local airlines seek up to 47 percent rise in airfares

JAKARTA (JP): The Association of Indonesian Airlines (INACA)
plans to raise domestic airfares between 35 percent and 47
percent beginning next week to compensate for the continued fall
of the rupiah against the dollar.

INACA secretary-general Benny Rungkat said yesterday Minister
of Communications Giri Suseno and Director General of Air
Transportation Zainuddin Sikado had in principle approved the
planned fare rises.

"The minister and the director general gave their approval to
our plan to raise domestic airfares last week on the condition
the new prices would not exceed the basic fare of 11 U.S. cents
per seat per kilometer," Benny said.

He said the tariff adjustment would raise the basic airfares
to 5.5 cents per seat per km from 2.9 cents at present.

The country's airlines have been severely battered by the
monetary crisis which has gripped the region for about a year as
they get income in rupiah but have 80 percent of their overheads
in dollars.

The country has six commercial airlines; state-owned Garuda
Indonesia and Merpati Nusantara Airlines and private firms Bouraq
Airlines, Mandala Airlines, Dirgantara Air Services and Sempati
Air. Sempati was forced to stop operations last month due to the
crisis.

The government last increased domestic airfares, by 37.5
percent, on May 7. But this apparently failed to help the
airlines that much.

Under the new tariff scheme, Benny said, the one-way economy
class fare for the Jakarta-Surabaya flight will rise to Rp
675,700 ($48.20) from Rp 466,000.

The economy class fare for Jakarta-Medan will increase to Rp
1,194,800 from Rp 8224,000 and the economy class fare for the
Jakarta-Jayapura route will rise to Rp 2,811,550 from Rp
1,939,000.

According to Benny, the May fares were made based on the
exchange rate of Rp 5,000 per dollar -- to be in line with the
assumptions of the previous state budget -- while the new fares
would be based on an exchange rate assumption of Rp 8,000 per
dollar.

He said INACA would, with the government's consent, further
adjust domestic airfares to bring them into line with the
government's latest exchange rate assumptions.

The government has changed its working exchange rate for the
1998/1999 State Budget to Rp 10,600 from Rp 5,000 per dollar.

"Anyway, we hope the rupiah will firm in the near future so
that we won't need to make another increase after July," Benny
said.

But, some legislators voiced their disapproval at the planned
airfare increases yesterday.

"We don't want any airfare increases. But, this is not a final
decision (of the Commission). We shall summon INACA for a hearing
Tuesday (today) afternoon," Ferdinand Potu Dotulong Lengkey,
chairman of the House Commission IV for communications, public
works and public housing, was quoted by Antara as saying.

Benny said INACA had not yet received any invitation to a
hearing with the Commission.

"I think it would be better if the Commission holds a hearing
with the minister of communications first, because the minister
has approved our plan to increase airfares," Benny said. (jsk)