New ruling causes rise in air fares
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)