Thursday, August 15, 2024
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Indonesia is transforming the air travel landscape by reducing costs, making flights more affordable and accessible for both locals and international visitors.
Indonesian Minister of Tourism and Creative Economy, Sandiaga Salahuddin Uno, announced on Wednesday that the country is actively working to make air travel more affordable for passengers.
To achieve this, the Indonesian government has formed a task force dedicated to reducing airfares. This initiative aims to lower domestic flight prices by around 10% by October.
The task force comprises various ministries and organizations, including the Coordinating Ministry for Economic Affairs (Kemenko Ekonomi) and the Coordinating Ministry for Maritime Affairs and Investment (Kemenko Marves).
Previously, the Indonesian National Air Carriers Association (INACA) reported that the aviation sector in the country has been struggling, with airlines experiencing financial losses despite high ticket prices.
Denon Prawiraatmadja, President of INACA, explained that the significant operating costs for flights have driven up ticket prices, leading to these losses.
Sandiaga emphasized that the government will thoroughly examine these challenges to ensure that Indonesia’s aviation industry can operate as efficiently as those in other countries.
Aviation expert Alvin Lie highlighted that a substantial portion of high airfares in Indonesia is due to heavy taxation imposed by both the government and airports.
Alvin explained that ticket prices encompass various costs, including airport operations, maintenance, and service fees, all of which contribute to higher fares for passengers.
Additionally, he pointed out that airfares are burdened with an 11% VAT and a 0.25% aviation fuel surcharge for domestic flights.
Moreover, airlines face these taxes when purchasing fuel and also incur import taxes on aircraft and parts, leading to double taxation and further increasing airfares.