Indonesia raises jet fuel surcharges and domestic airfares to offset soaring oil prices, while pledging to maintain fuel subsidies and cover ticket taxes for travellers.
JAKARTA: Indonesia has announced a significant increase in the jet fuel surcharge and permitted airlines to raise domestic ticket prices in response to soaring global oil prices.
Economy Minister Airlangga Hartarto stated on Monday that the jet fuel surcharge would rise by 28 percentage points, from 10% to 38%.
He also confirmed that the government-capped base price for domestic flight tickets could be increased by between 9% and 13%.
The government will cover the 11% value-added tax on domestic tickets to help offset the impact on travellers, with Airlangga noting this subsidy amounts to approximately 1.3 trillion rupiah (about USD 76 million) per month.
These measures will be re-evaluated after two months, depending on whether the conflict in the Middle East continues.
Global crude prices have surged past USD 100 per barrel since a series of US and Israeli strikes on Iran sparked a wider regional conflict and the effective closure of the Strait of Hormuz.
At Jakarta’s Soekarno-Hatta International Airport, the price of jet fuel for domestic flights has risen more than 70% since March, according to state oil company Pertamina.
The price for international flights has nearly doubled over the same period.
Despite these pressures, the government insisted it would not cut its subsidy on domestically-consumed gasoline and natural gas.
Finance Minister Purbaya Yudhi Sadewa emphasised that the subsidised fuel price would not be raised until the end of the year, asserting his budget was adequate.
Sadewa added that with various savings, the government could ensure the fiscal deficit remains around 2.9% of GDP, staying within the legal limit of 3%.
The government also announced it would eliminate import duties on aircraft spare parts to help lower airline operational costs.
Southeast Asia’s largest low-cost carrier, AirAsia X, said on Monday it was also raising ticket prices and cutting routes to cushion the impact of the conflict.
Jakarta last month announced fuel rationing and mandated work-from-home for civil servants to conserve energy stocks.