Southeast Asia’s largest economy works to make air travel more affordable

The Indonesian government has established a task force for the goal of lowering airfares. It is expected that domestic airfares will decrease approximately 10% by October.

The force includes the Coordinating Ministry for Economic Affairs (Kemenko Ekonomi), the Coordinating Ministry for Maritime Affairs and Investment (Kemenko Marves), as well as other relevant ministries and organizations.

Previously, the Indonesian National Air Carriers Association (INACA) assessed that the aviation business in the country is stagnating and incurring losses. Despite high ticket prices, airlines have not generated significant profits.

Denon Prawiraatmadja, President of INACA, stated that airlines are facing losses due to the high flight costs, which have pushed up ticket prices.

Sandiaga mentioned that all these issues will be studied to ensure that Indonesia’s aviation industry operates efficiently, similar to those of other countries.

Aviation observer Alvin Lie pointed out that the high tax burden from both the government and airports is a major factor contributing to high airfares in Indonesia.

According to Alvin, the ticket price for a passenger includes costs for airport operation and maintenance, as well as airport service fees. These significant costs included in the ticket price lead to high fares for passengers.

Alvin further noted that airfare also includes an 11% VAT and a 0.25% fee for aviation fuel for domestic flights.

Meanwhile, airlines have to bear these taxes when purchasing fuel and also pay import taxes on aircraft and parts. This results in double taxation, causing high airfares.