JAKARTA, KOMPAS — The government has to ensure the sustainability of the national aviation industry. However, at the same time, it also should be able to find low-cost flight options for the people.
In order to fulfill all interests, the government has set three strategies to be able to solve the problem related to persistently high airplane ticket prices. The three strategies are ; to lower the prices of the low-cost carriers especially during the low season, to provide fiscal incentives and to cooperate with other relevant companies in the aviation industry to help flight costs.
According to Statistics Indonesia (BPS), on an annual basis, air transportation fares contributed 0.3 percent to inflation in May 2019. The contribution had risen from 0.05 percent in the same month last year.
The strategy was also adopted by the government to reduce the airline\'s financial inefficiency caused by high operational costs.
The government will entrust the low-cost airlines to find a solution to reduce their ticket prices.“ In the coming week, the airlines will be asked to review the possibility of reducing airfares and then report to the government,” Coordinating Economic Minister Darmin Nasution said a after a limited coordination meeting at his office on Thursday.
The fiscal incentives, Darmin said, would be given to enable the airlines to reduce their operating costs. The incentives include aircraft rental, maintenance and repair services; aircraft rental services abroad and import of aircraft and spare parts. "The government is finalizing its regulation, which is expected to be completed next week or by the end of June," he said.
Regarding collaboration with the aviation industry, the government will also ask the companies involved in the industry to share the burden. These companies include PT Pertamina, PT Angkasa Pura I and PT Angkasa Pura II.
Efficiency
The secretary of the Office of the Coordinating Economic Minister, Susiwijono, said the three steps to be taken by the government would be needed to help improve the airlines’ operational efficiency, because in determining airfares, there should be a strategy to improve the efficiency of cost components.
This cost components consist of aviation fuel or avtur, which accounts for 30-31 percent of operating costs, aircraft rental (20-24 percent), human resources (14-16 percent), as well as maintenance and spare parts (16-20 percent).
"In the operation of the airline, airport services are also part of the cost components. The airlines are not the only players in the aviation industry," said Susiwijono.
Pertamina has been asked to reduce avtur prices, while Angkasa Pura I and Angkasa Pura II as airport operators have also been asked to reduce the cost component, which has an impact on the setting of airfares.
The government has evaluated the impact of its move last month to reduce the ticket price ceiling by between 12-16 percent. Transportation Minister Budi Karya Sumadi said that in general, the airlines had obeyed the new price ceiling regulation. However, consumers have not really felt the impact of the price cut.
Expert staff to the state-owned enterprises minister, Sahala Lumban Gaol, said state companies involved in the aviation industry were committed to reducing the cost component. Hopefully, this will have a positive impact.
The president of PT Angkasa Pura II, M Awaluddin, said airport services contributed 5 percent to airline ticket prices. These services include landing, aircraft parking, jet bridges, check-in services and passenger services.
The decline in service costs should help airport operators improve efficiency. A number of cost components can be synergized, such as the ticketing system, simplification of the airline\'s operational offices at the airport and ground handling.
"For ground handling costs, we expect to be able to decrease them by 10-20 percent," said Awaluddin.
Indonesian Ombudsman member Alvin Lie argued that airfare cuts should be made after incentives for the airline were given.
On the other hand, an observer of aviation management and aviation industry from the German Alumni Association, Henry Tedjadharma, said the government had taken the right strategy. "The government\'s decision to provide fiscal incentives and involve airport operators and fuel suppliers to reduce flight ticket prices is the right step. Now, it\'s time for airlines to improve their business management," he said. (JUD/ARN/INA)