Rising Operational Costs Prompt INACA to Request 15% Increase in Domestic Flight Upper Fare Limit
The Indonesian National Airlines Association (INACA) has requested that the government increase the upper fare limit (TBA) for domestic flights by 15%. This request follows a surge in airline operational costs due to rising aviation fuel (avtur) prices, the weakening rupiah, and global geopolitical pressures.
INACA Secretary General Bayu Sutanto stated that the association is also proposing a 15% increase in the fuel surcharge from the amount set under Ministry Regulation No. 7 of 2023. The adjustment is requested to apply to both jet and propeller aircraft, which currently refer to Ministry Regulation No. 106 of 2019.
“In addition to adjusting the fuel surcharge and TBA amounts, INACA also requests a number of temporary stimulus policies (such as those during Eid 2026), namely the deferral of VAT on avtur and domestic tickets, relief on airport costs or PJP4U, and the policy of rescheduling outstanding payments for airport and navigation fees to be maintained,” Bayu said in a written statement in Jakarta on Wednesday (25/3/2026).
Bayu explained that the request is to anticipate Pertamina’s avtur price adjustment starting 1 April 2026, while maintaining airline business continuity, flight safety, and national air transport connectivity. The aviation industry is said to be under increasing pressure due to the US-Israel conflict with Iran.
“That situation has led to a rise in global oil prices and the weakening of the rupiah exchange rate against the US dollar, both of which significantly affect the increase in operational costs for national airlines,” Bayu continued.
Bayu elaborated that many airlines in various countries have adjusted operational costs by adding fuel surcharges ranging from 5% to 70%. Such adjustments have been made by airlines including Air India, IndiGo, Cathay Pacific, Thai Airways, Qantas, Korean Air, and Ethiopian Airlines.
Bayu outlined that when the TBA was set in 2019, the average US dollar exchange rate was Rp14,136, whereas in March 2026 it reached around Rp17,000, an increase of more than 20%. Approximately 70% of airline operational costs are in US dollars, while revenue is earned in rupiah. “Thus, the rising US dollar exchange rate will further burden the finances of national airlines,” Bayu added.