New ruling causes rise in air fares
The Jakarta Post, Jakarta
Economy-class passengers may have to pay up to 16.4 percent more for plane tickets after the Ministry of Transportation's introduction on Friday of reference prices for the airlines industry.
Ministerial Decree No. 36/2005 on the reference prices stipulates that airlines are required to set their fares for economic-class scheduled domestic routes based on the reference prices. The ruling is aimed at widening the government's supervision of passengers' security and safety as well as fair business competition.
"The government will use the reference prices as a tool to supervise the operations of domestic airlines in accordance with flight regulations," transportation minister M. Hatta Radjasa said.
Although the decree does not specify sanctions for airlines that ignore the reference prices, the government said it would investigate the operations of airlines that violate the regulation.
The decree says that should an air carrier sell tickets lower than the reference prices, the ministry's directorate general of air transportation will investigate its organizational, financial, operational and maintenance activities. The directorate general will also ascertain whether security, safety and service-orientated regulations have been met.
"If the air carrier proves to have violated (the regulations), the government may revoke its license for serving the route effected by the price violations," Hatta said.
The decree says that the directorate general will report the violations to the Business Competition Supervisory Commission (KPPU) for further investigation.
KPPU head Sutrisno Iwantono, as quoted by Media Indonesia, said on Thursday that the KPPU would take action against any airlines violating the reference prices if it undercuts prices by reducing costs maintenance and other basic activities that might endanger the safety of passengers.
Hatta explained that the reference prices were calculated on the basis of the operation of a Boeing 737-400 aircraft -- which is regarded as efficient -- with a load factor of 75 percent and the aviation fuel price of Rp 4,530 (47.6 U.S. cents) per liter.
Based on such a calculation, the price of a ticket for the Jakarta-Yogyakarta route will cost Rp 233,000, 11.4 percent higher than the price set by a government ruling introduced in 2003, and a ticket for the Jakarta-Medan route Rp 487,000, or 16.4 percent higher.
Hatta called on passengers, members of the Indonesian National Air Carriers Association and any other parties concerned to help the government in supervising the implementation of the new ruling on reference prices by reporting any violations to the directorate general of air transportation. (001)