Finance.detik.com reports that Indonesia’s largest airline operator, Lion Air Groupcalls on the Indonesian government to revise the current regulations stipulating the minimum and maximum levels of domestic air fares that airlines can charge the public.
Air Lion complains that current market conditions, including rising aviation fuel prices and the strong US dollar, have made operating commercial aircraft increasingly expensive. The CEO of Lion Air Group, Daniel Putut Kuncoro Adi, reports that many vendors supplying equipment to the airline have closed while those remaining in business are raising prices. The weak Indonesian rupiah has also increased the cost of operating any commercial airline fleet.
speak before Committee V of the Indonesian House of Representatives (DPR-RI), Daniel said on Tuesday, June 28, 2022: “Materials, spare parts, transportation, logistics and components are now expensive because we have to buy these items in US dollars.”
The Lion Air CEO said he hoped that Department of Transportation Regulation Number 20 of 2019 would be revised, relaxing minimum and maximum airfares for airline tickets, as stipulated ticket prices no longer reflect current commercial terms.
Daniel explained: “Regulation number 20 of 2019 was published before the COVID-19 pandemic and must now be revised because operational costs cannot be reduced.” Continuing, he said that the increase in air traffic and changes in flight schedules lead to increased costs. To make his point, Daniel points to changes in the air route between Jakarta and Tanjung Karang in Lampung, South Sumatra.
“Cengkareng (Jakarta) to Tanjung Karang which once could be flown in just 35 minutes now, due to increased traffic, may take 50 minutes or an hour,” Daniel said. This is also the case on the Bali-Lombok route, which also takes longer to fly, resulting in a higher cost. Using the current maximum tariffs set by the government, the LionAir CEO claims that many air routes are no longer profitable to operate.
Daniel commented: “Bali-Lombok is also at risk as the required flight time is now longer. If air fares are not revised, air operators will not fly on these routes because even with 100% passenger loads profitable operations are not possible.
He also said that the dwindling armada of domestic planes was increasing the cost of airfares.
The President of Commission V of the DPR-RI, Lasarus, says the increase in airfare prices is also attributable to the national carrier garuda indonesia the operation of several aircraft that are not adapted to the demands of the traveling public. Adding, “The high price of airline tickets is also due to the lack of available airline seats from Garuda Indonesia, with passenger demand exceeding available seats.”
by Garuda the current aircraft fleet is reduced to 33 aircraft. It compares to Air Lionwhich operates 255 aircraft.
Meanwhile, the director of human capital of Garuda indonesia, Arya Perwira Adileksana, said DPR-RI Commission V that his airline is working to escape the threat of bankruptcy and hopes to grow its armada to 70 planes by the end of 2023. The garuda indonesia subsidiary company Citilink Indonesia operates 34 aircraft, a number they plan to increase to 49 by the end of 2023.