Ministry Signals Higher Airfares as Government Readies New Price Cap

Jakarta - Minister of Transportation Dudy Purwagandhi has given a strong signal that domestic flight ticket prices could rise in the near future. This comes as the government plans to revise the upper limit tariff for plane tickets, with discussions on the matter almost finalised. Dudy said that talks on the new upper limit tariff have been completed and it is now only awaiting a ministerial-level meeting before being formally adopted. He stated the new policy is expected to address airlines’ needs, as they have recently faced operational cost pressures due to global conditions and the weakening rupiah exchange rate. ‘The upper limit tariff has been discussed and perhaps it will only take a ministerial-level meeting later. Because there is a synchronisation of the upper limit tariff, a new upper limit will be implemented going forward. It is hoped this can answer what the airlines desire,’ Dudy said when met at the Parliament Complex in Jakarta on Thursday. Although he did not detail the size of the increase to be applied, Dudy stressed that the government wants to accelerate the finalisation of the regulation. According to him, the current condition of the aviation industry requires attention so it can continue to operate healthily. ‘As soon as possible, because we also have to look at the current global conditions, where we also need to give attention to the airlines,’ he said. This statement opens up more room for airlines to raise ticket prices once the new upper limit tariff is issued. However, the government claims it is still trying to maintain a balance between the interests of the airlines and the public’s purchasing power. ‘In principle, we maintain a balance between the airlines and the passengers or the public,’ he noted. Dudy also revealed the new scheme being prepared not only includes changes to the upper limit tariff, but also a more flexible fuel surcharge mechanism. According to him, the upper limit tariff will later be set based on current economic conditions, while the fuel surcharge can be adjusted following spikes or declines in avtur prices. ‘What has been conveyed for now is that we will set the upper limit tariff based on current conditions, but we will also consider flexibility in the event of a spike like the current conditions. So perhaps there will be a combination of changes to the upper limit tariff, but also a flexible fuel surcharge, anticipating if there is an increase in avtur like before,’ he explained. Dudy explained one of the factors being considered in the new formulation is the rupiah exchange rate. However, the government will set a certain reference exchange rate as the basis for calculating the upper limit tariff, similar to the assumed exchange rate used in the state budget. ‘The exchange rate is quite dynamic. Just like in the state budget, we set a boundary, for example at what exchange rate. For the upper limit tariff, we also have an exchange rate as a benchmark, and later there will also be a fuel surcharge that can be flexible to anticipate spikes or declines in the avtur price in particular,’ Dudy elaborated. When asked about the exchange rate range to be used as a benchmark, Dudy was not yet able to specify. The signal of an upper limit tariff increase comes amid a previous government policy that had already opened room for ticket price hikes through fuel surcharge adjustments. The Ministry of Transportation, through Minister of Transportation Decree No. KM 1041 of 2026, set a fuel surcharge policy for domestic flights in response to a spike in avtur prices. The regulation, effective from 13 May 2026, allows airlines to impose a fuel surcharge at the highest percentage of between 10% and 100% of the upper limit tariff. Based on an avtur price evaluation per 1 May 2026, which reached Rp29,116 per litre, airlines are permitted to apply a maximum fuel surcharge of 50% of the upper limit tariff according to their respective service groups.