The Ministry of Transportation finally ensure the provision airline fare lower limit amid of soaring jet fuel prices and the weakening of Rupiah. On Tuesday (Aug 28), Budi Karya Sumadi, Minister for Transportation, announced to raise the minimum airfare to 35% of the ceiling price from previously 30%.
The move is not popular among low-cost airlines which relies on cheap tickets to attract passengers but will certainly help flag carrier PT Garuda Indonesia Tbk (GIAA) which sees its market share eroded by the popularity of budget airlines like PT Indonesia Air Asia (CMPP) and PT Lion Air.
Chairman of the Indonesian National Air Carriers Association (INACA) Pahala Mansury said the airline’s flight costs are currently heavily affected by the high prices of aircraft fuels and the weakening of the Rupiah exchange rate. With the tariff increase, he said, at least airlines has an ability to adjust the increase in fuel management.
