Jakarta, Indonesia Sentinel — Indonesia’s Deputy Minister of Transport (Kemenhub) Suntana announced that there could be a potential reduction in airline ticket prices following discussions with various stakeholders, aimed at easing travel costs for the public ahead of the Christmas 2024 and New Year 2025 holiday season.
“Based on our calculations during recent meetings, it is likely that airline ticket prices will decrease,” Suntana said in Jakarta on Thursday, November 14, as reported by Antara.
The government is currently conducting a comprehensive review of the operational costs for airlines, including various factors that influence ticket prices, Suntana explained. Initial assessments from recent meetings indicate a strong likelihood of ticket price reductions before the peak holiday travel period.
“Our target is to lower airfares before Christmas 2024 and New Year 2025, as a sort of holiday gift for the public,” Suntana added.
To achieve this goal, the Ministry of Transportation is coordinating with the Ministry of Economic Affairs and the Ministry of Infrastructure, following directives from President Prabowo, to ensure ticket prices become more affordable for travelers during the festive season.
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Regarding concerns about a proposed 12% Value-Added Tax (VAT) hike that could potentially drive up ticket prices, Suntana emphasized that the regulations remain flexible. While there are plans to raise the VAT to 12%, certain public activities will not be subjected to this tax.
Ticket Price Increase Factors
Previously, Garuda Indonesia CEO Irfan Setiaputra highlighted that ticket prices are influenced by multiple factors, including taxes and fuel costs (avtur). He also pointed out that the government-imposed upper price limit (TBA) plays a critical role in determining ticket pricing.
“We always consider the TBA, but keep in mind that if the VAT rises to 12%, ticket prices will inevitably go up. The TBA for Garuda’s tickets, along with added taxes and fees from Angkasa Pura [airport operator], will affect the final cost,” Irfan said on Monday, November 11, 2024.
Irfan noted that Garuda Indonesia has not increased ticket prices since 2019. However, prices are still influenced by the TBA and various additional components, such as taxes.
“We have adhered to the government’s ticket price regulations since 2019. However, there are additional costs, like VAT, Gross Revenue Tax (PDB), and contributions to Jasa Raharja [insurance agency]. For domestic flights, aviation fuel is also taxed,” he explained.
The government’s efforts to lower airfare prices come as part of a broader initiative to support the public during the high-demand holiday travel period, ensuring more accessible travel options for the festive season.
(Radi/Agung)
