Merpati Airlines may raise fuel surcharge on rupiah, oil prices
Merpati Airlines may raise fuel surcharge on rupiah, oil prices
Kyunghee Park, Bloomberg/Singapore
PT Merpati Nusantara Airlines, a state-owned Indonesian carrier, may raise fuel surcharges should the rupiah extend its decline and oil prices rise from a record.
The rupiah fell to a three-and-a-half year low on Thursday after an increase in oil prices added to concern the government of Southeast Asia's largest economy will not be able to stem the currency's decline.
"If it's sustained for a month, maybe we will recalculate the price for fuel surcharges," Zifky Priatelna, an official at Merpati's operational control, said by telephone. "Mostly our costs are still in U.S. dollars."
The rupiah's decline has boosted costs for Indonesian airlines including Merpati and PT Garuda Indonesia because they pay for fuel in dollars. The price of jet fuel traded in Singapore has surged 60 percent this year, closing at US$76.70 a barrel yesterday, according to data compiled by Bloomberg. Fuel accounts for about 48 percent of Merpati's total costs, Priatelna said.
The existing fuel surcharge makes up between 9 percent and 15 percent of the price of a Merpati ticket, Priatelna said.
President Susilo Bambang Yudhoyono on Wednesday said he will work with the central bank to curb the rupiah's slide after the currency had its biggest drop since May 10, 2004. Rising oil prices increase demand for dollars to import fuel and make it more expensive for the government to subsidize energy prices for the nation's 40 million people who are without work or don't have a steady job.
Indonesia's currency traded at 10,341 per dollar at 3:33 p.m. in Jakarta.
Merpati is also cutting costs in other parts of its operations, including catering, in an attempt to cover rising fuel costs, Priatelna said.
Indonesia's government is studying a plan to combine Garuda, which is seeking a government bailout, with Merpati and PT Pelita Air Service to help the companies become profitable, State Enterprise Minister Sugiharto said on Aug. 16.
The government may make a decision by as early as February, he said. Pelita is controlled by Indonesia's state oil company PT Pertamina.