Southeast Asia’s largest economy considers airfare reduction

“I agree with the proposal. One of the contributors to expensive ticket prices is the tax,” he said as quoted by the country’s national news agency Antara.

The minister emphasized the impact of the domestic tourist movement on the local economy. Their spending, according to him, could be higher when compared to foreign tourists.

The minister said the economic impact brought by domestic tourists to the destination areas could replace state revenue lost from eliminating airline ticket taxes.

Earlier, the ministry’s Transportation Policy Agency disclosed the results of a joint study by stakeholders regarding the reduction in airline ticket prices.

Through the study, the ministry proposed the elimination of ticket taxes for airplanes, for equal treatment with other modes of transportation having their tax eliminated.

It also detailed short-term policies to be implemented in stages, namely by providing fiscal incentives for the cost of aviation fuel, aircraft spare parts, and subsidies from airport service providers for the cost of aircraft landing, placement, and storage services.

Indonesia, the largest economy in Southeast Asia, welcomed 6.4 million foreign tourists from January to June, marking a 21% increase compared to the same period last year.