During a hearing with Commission V of the House of Representatives (DPR), which oversees infrastructure and transportation, here on Thursday, the ministry's director general of air transportation, Lukman F. Laisa, said the evaluation is necessary due to increased airline maintenance costs.
The rising costs of maintenance have been triggered by aircraft reactivation after the COVID-19 pandemic.
He informed that global spare parts supply chain disruptions, higher contract prices, and fluctuations in the US dollar exchange rate have also pushed up maintenance costs.
Meanwhile, there has been a decrease in aircraft leasing costs due to the Financial Accounting Standard (PSAK) 73 of 2020, which requires aircraft lease components to be recorded as depreciation.
The restructuring of aircraft lease debts in the post-pandemic period has also contributed to the rising airline operational costs, Laisa added.
In response to these conditions, his side has proposed several policy adjustments regarding domestic commercial airfares.
First, it has proposed the revision of Ministerial Regulation No. 20 of 2019 and Ministerial Decree No. 106 of 2019 concerning the upper fare limit for economy class domestic commercial flights.
“There is a need to update the fare calculation formula by considering travel distance and duration, as well as adjusting the upper and lower fare limits,” he explained.
These adjustments are particularly needed for short-haul domestic routes, he said.
His side has also proposed that fare differentiation based on service class should now only apply to jet aircraft, and not propeller aircraft, considering that propeller aircraft are commonly utilized for air connectivity in remote areas.
His side has also proposed tariff adjustments to prevent predatory pricing and foster healthier market competition in response to excessive fare disparities between low and peak seasons.
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Translator: Shofi, Kenzu
Editor: Aditya Eko Sigit Wicaksono
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