Indonesia denies airlines plea to scrap airfare ceiling
The Indonesian government has refused to scrap the maximum airfare ceiling on busy domestic routes after a plea by several national airlines.
Air transportation director Djoko Murjatmodjo said the ceiling will remain as it is an important tool for consumer protection.
"We cannot scrap the ceiling price mechanism without revising Law No. 1/2009 on flight services, and the law itself has a function to protect citizens," Djoko said.
Recently Indonesian National Air Carriers Association (INACA) head Arif Wibowo said the ceiling price mechanism should be discontinued for busy routes as fierce competition would keep prices low.
He said airlines were suffering financially as when the price rules were implemented they were based on an exchange rate of Rp 10,000 per US dollar, much lower than the current rate of Rp 12,000 per dollar.
The rupiah’s depreciation and high fuel taxes has squeezed the profits of many carriers, Arif said.
Tony Fernandes, group CEO of low-cost carrier AirAsia, which operates an Indonesia division, also urged the government to end the policy.
The transport ministry is reportedly considering increasing the ceiling price by 10% and will make a final decision on this by the end of this month.
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Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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