Six domestic airlines agree to end competition on prices
Six domestic airlines agree to end competition on prices
JAKARTA (JP): Six domestic airlines have agreed to collude on
prices, beginning in July, by signing a memorandum of
understanding establishing allowable discount airfare levels for
travel agencies and passengers.
Under the agreement signed here Friday, discounts for travel
agents will be limited to a maximum of seven percent.
Until now, savvy travelers have been able to find discounts of
up to 40 percent off published tariffs for travel agencies, which
kept competition alive within the industry.
Minister of Transportation Haryanto Dhanutirto, witnessed the
signing of the agreement by president Wage Moelyono of Garuda
Indonesia, J.A. Sumendap of Bouraq Indonesia, Soebagio of Mandala
Airlines, Ridwan Fatarudin of Merpati Nusantara Airlines, Maki
Perdanakusuma of Dirgantara Air Service and Hasan Soedjono of
Sempati Air.
The agreement also allows airlines to offer discounts of up to
15 percent to members of professional organizations attending
special conferences, 25 percent to students, 35 percent to
elderly people and 45 percent to veterans.
Return tickets may get a discount of up to five percent and
tickets for tour packages 15 percent, while foreign tourists who
use Indonesian airlines for their domestic flights and employees
of travel agents and airlines can enjoy discounts of up to 50
percent.
The agreement also requires airlines to pay a fine of up to Rp
10 million (US$4,666) for each violation they make of the
agreement.
The funds collecting from fining will go to the Indonesian Air
Carriers Association (Inaca).
Hasan commented that the agreement is expected to increase the
profitability of domestic airlines by reducing the competition
which has led to a price war.
The six air carriers last year made a combined profit of Rp
1.8 trillion (US$837 million).
Inaca's chairman, Soelarto, said he sees problems for the
introduction of the agreement because no agency has been assigned
to control it.
"Regulation of the monitoring of the agreement's
implementation is needed," he said. (yns)