The government’s policy of increasing the fuel surcharge on air tickets presents a significant dilemma, according to Tulus Abadi, Chairman of the Indonesian Empowered Consumer Forum (FKBI). While this measure offers crucial relief to airlines grappling with escalating aviation fuel (avtur) costs, it simultaneously burdens consumers and risks stifling public demand for air travel.
Abadi highlighted that domestic air passenger numbers had already declined by approximately 20% prior to this due to previous increases in airfare. The predicament is stark: “If no increase is made, the sustainability of airline businesses could be jeopardized. However, if ticket prices become even more expensive, the public’s ability to purchase tickets will also be further strained,” Tulus explained to Katadata.co.id on Monday (18/5).
He emphasized the urgent need for the government to implement proactive mitigation strategies. These measures are essential to strike a delicate balance, ensuring the continued viability of airline operations while safeguarding consumer interests.
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To address this complex issue, Tulus Abadi outlined several key recommendations. Firstly, the Ministry of Transportation must enhance its oversight to ensure airlines strictly adhere to the maximum fuel surcharge increase of 50% of the Upper Limit Tariff (TBA). Should any violations be identified, the government is urged to impose decisive administrative sanctions, ranging from the suspension of routes to the complete revocation of airline operating licenses.
Secondly, scrutiny over airline performance, particularly regarding on-time performance (OTP), needs to be intensified. Abadi argued that any rise in ticket prices must be accompanied by a demonstrable improvement in service quality for passengers. “It’s imperative that the increase in the fuel surcharge is not made without a corresponding improvement in airline performance for its users,” he stated.
Thirdly, airlines themselves are encouraged to undertake comprehensive operational efficiency measures to reduce their overall cost structures, thereby minimizing the impact on ticket prices.
Fiscal Relaxation
Beyond regulatory measures, Abadi also called for government intervention through fiscal relaxation. This could involve cutting or completely eliminating the Value Added Tax (VAT) on air tickets for the duration that the fuel surcharge policy remains in effect. He noted that the 11% VAT component significantly contributes to the overall ticket price, and its removal would prevent the financial burden from falling entirely on consumers.
Furthermore, the government is urged to provide targeted subsidies to airlines that operate routes in Indonesia’s 3T regions – the frontier, outermost, and disadvantaged areas. Such subsidies could be implemented through the purchase of empty seats on pioneer flights within these critical regions. Tulus Abadi stressed that air transportation is often the primary mode of mobility for communities in 3T areas, making its affordability a crucial concern that must be protected.
In contrast, for residents of Java, Abadi observed that a range of alternative domestic transportation options remains available, including trains, buses, and private vehicles, offering a degree of flexibility not present in more remote locations.
Summary
The government’s policy of increasing fuel surcharges on air tickets aims to support airlines facing escalating aviation fuel costs, but this risks further burdening consumers and stifling demand. Domestic air passenger numbers had already declined by 20% due to previous fare increases. Tulus Abadi of the Indonesian Empowered Consumer Forum (FKBI) emphasized the urgent need for government strategies to balance airline viability with consumer interests.
Abadi recommended enhanced oversight to ensure airlines adhere to the 50% fuel surcharge limit, imposing sanctions for violations, and requiring airlines to improve service quality in line with price increases. He also called for fiscal relaxation, suggesting the government cut or eliminate the 11% Value Added Tax (VAT) on air tickets. Additionally, targeted subsidies for airlines operating in 3T (frontier, outermost, and disadvantaged) regions are crucial to maintain affordable air transportation where it is often the primary mode of mobility.
