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)