Major local airlines announce surcharges to offset fuel hike

Tony Hotland, Jakarta

Major Indonesian airlines are the latest to charge a new levy to compensate for rising jet fuel costs caused by the current surge in the global oil price.

National flag carrier Garuda Indonesia will apply new fares starting Tuesday, especially for the international routes.

"The new fares will only be applied on several international flights, such as to Australia. But it doesn't rule out the possibility of applying new fares on domestic flights if the price of jet fuel continues to rise," Garuda's executive vice president Bachrul Hakim told The Jakarta Post over the weekend.

He said that jet fuel, or aviation turbine fuel (avtur), accounted for almost 30 percent of Garuda's overhead.

Garuda purchases avtur from state oil and gas company PT Pertamina and from foreign oil companies in countries that are Garuda destinations.

For example, a surcharge of A$15 will be applied on flights to and from Australia. A surcharge of NZ$12 will be imposed on flights to and from New Zealand.

Merpati Nusantara's executive vice president Toto Nursatyo said that Merpati had already introduced new fares last Tuesday on all domestic and international routes it serves.

"The new fares are 5 percent to 10 percent higher. We're sure that consumers will understand the decision. It's simply an economic principle that prices will go up whenever there's an increase in production costs," said Toto.

The highest increase will apply for routes that had relatively lower fares, such as from Jakarta to cities on Java island, Toto said.

He claimed that there had been no significant decrease in the number of passengers since the introduction of the new fares.

Meanwhile, no-frills airline Lion Air will only consider raising ticket prices should the oil price reach US$50 a barrel.

"We already predicted the oil price increase last year and our current fares are based on that assumption. On the other hand, the rising oil price has delayed our plan to lower our fares up to 20 percent on all our 41 routes," said Lion's spokesman Hasyim Arsal Alhabsi.

He added that the airline would survive because it had completed several costly activities, such as pilot training programs and the use of foreign consultants.

Airlines over the globe -- including Australian carrier Qantas, Air New Zealand, British Airways, Malaysian airlines, and Singapore airlines -- have been applying surcharges on ticket sales as a result of the highest global price for oil in more than two decades.

Global oil prices have recently jumped to a 21-year average high of around $41 per barrel, although late last week it started to weaken again toward the $40 per barrel level on news that the Organization of Petroleum Exporting Countries (OPEC) may decide to increase its output quota at its meeting in Beirut on June 3.