Alleged Unfair Airline Ticket Pricing under Investigation
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·3 minutes read
JAKARTA, KOMPAS — The Business Competition Supervisory Commission (KPPU) is investigating alleged unfair practices in determining airline ticket prices in the country. The investigation is being conducted not only on ticket prices but also cargo fees, as well as dual roles in the management of airline companies.
"The examination has entered the investigation stage," KPPU commissioner Kodrat Wibowo said in Jakarta on Wednesday.
Meanwhile, the KPPU’s other commissioner, Guntur Syahputra Saragih, said the investigation into the alleged price fixing was based on article 5 of Law No. 5/1999 concerning the prohibition of monopolistic practices and unfair business competition.
The KPPU has sought information from relevant parties, namely Lion Air Group and Garuda Indonesia (Persero) due to their dominance in the domestic aviation market.
Article 5 of Law No. 5/1999 stipulates that business players are prohibited from making agreements with their competitors to fix the prices of goods and services.
Guntur said the KPPU was investigating the case because there were indications of unfair practices in ticket pricing. However, he could not confirm when the investigation would be completed and taken to the trial stage.
"The investigation is not limited by time. If no evidence is found, the investigation will be stopped," he said.
Separately, former KPPU chairman Syarkawi Rauf said that in examining cases of alleged unhealthy business practices, such as cartels, the KPPU usually looked at three factors, which included the structure of the market share of the company being examined, corporate behavior and financial performance.
Sensitive
Chappy Hakim, the chairman of CSE Aviation Consultant, said airline operating costs were quite sensitive to the fluctuation of the rupiah exchange rate because about 95 percent of the components of the operating costs were based on US dollars. In fact, the volatility of the rupiah exchange rate against the dollar, which significantly affects airline ticket prices, was beyond the control of a,irlines, he added.
"Airline ticket prices are determined through a long process. The operating costs which are influenced by the fluctuation of the rupiah exchange rate, play the most important role in determining ticket prices,” he said.
According to Chappy, the government must separate the price caps imposed on low-cost carriers and full services airlines so that the gap in ticket prices is not too wide and can be easily monitored. The pricing regulation should also be adjusted to the fluctuation of the rupiah exchange rate.
Separately, a member of the Indonesian Ombudsman, Alvin Lie, said airline tickets in Indonesia were relatively high because the growth of the number of airplanes operated by local carriers far exceeded the growth of demand. As the result, the seating capacity of their airplanes was far higher than the number of passengers, causing the increase in operating costs, he added.
Airlines must pay their crew salaries even though the planes do not fly. He gave an example, a Boeing or Airbus aircraft with a seating capacity of 180 is supported by at least four pilots, four copilots and four cabin crew.
Alvin said that about 80 percent of airline operational costs went to purchasing fuel, procuring and maintaining aircraft and paying the salaries of the employees. Airlines can no longer save costs for aircraft procurement and maintenance.
"Apart from that, there are costs that airlines cannot control, such as airport services, navigation services and commission for travel agents. "Airport rental rates also continue to rise," Alvin said. (FER/KRN)