The Indonesian government plans to provide a stimulus for air transportation during the pandemic, said the official last week - Photo: Special

JAKARTA  (TheInsiderStories) – The Indonesian government plans to provide a stimulus for air transportation during the pandemic, said the official last week. The country to start disbursing the fresh funds in August with a total amount more than Rp370 billion (US$25.17 million).

As reported, the airliners and airport operators’ business has suffered during the virus outbreak. Recently, PT Garuda Indonesia Tbk (IDX: GIAA) reported loss Rp10.1 trillion in the first semester (1H) of 2020 after booked a net profit of $24.11 million in the 1H of last year

While, PT AirAsia Indonesia Tbk‘ (IDX: CMPP) total passengers fell by 99.8 percent to 4,059 sitter in the 2Q of 2020. As a group, Malaysia’ AirAsia Bhd’ passenger number occupants and seat capacity also dropped by 98 percent in the same period to 204,082 in the same period.

Director general at the transportation ministry, Novie Riyanto, said due to the large-scale social restriction policy, the movement of aircraft and passengers decreased drastically. The stimulus, he continued, to maintain flight safety with a total requirement of Rp91 billion.

He said, the government also wants to stimulate the passengers to fly with health protocols by providing incentives to adjust the cost of Aircraft Passenger Services. The stimulus to gives for 2.5 million passengers in 13 locations supporting tourist areas with total amount Rp279 billion.

The coordinating minister for maritime affairs and investment, Luhut Binsar Panjaitan has reported, the domestic tourism reactivation has been carried out in Banyuwangi in East Java and Bali. The movement of domestic tourists will have great potential in tourism recovery and the main driver of the tourism sector in 2020 – 2021, he adds.

Earlier, the government has designed a tourism stimulus program worth Rp3.8 trillion including airline incentives worth Rp430 billion with a budget allocation for transportation ministry.

Last June, Indonesia considered to open the country for travelers from China, South Korea, Japan and Australia to recover the economy. So far, the country’ tourism sector faces potential losses of US$4 billion due to the drastic decline of foreign tourists to the country.

Beside, Pandjaitan asserted, there needs to be an effort to recover and improve the tourism sector, especially the contributions of domestic tourists to 70 percent of the total tourists. Indonesia itself is 54 – 56 percent supported by domestic tourists and the rest from abroad.

In the latest report, Moody’s Investors Service rated coronavirus spread will significantly slow economic growth, which will in turn amplify its financial impact on several key corporate sectors, especially tourism. The assessment is based on its baseline scenario, which assumes a normalization of economic activity in the second half of the year, and the ability of some companies to withstand the effects of the virus will depend on its duration.

The agency downside scenario factors in a jump in cases and public fear that the virus will not be contained in the first half of 2020, leading to extensive and prolonged travel restrictions and quarantines, along with a prolonged slump in commodity prices. While, IHS Markit rated, the airlines typically adhere to performance-linked dividend policies and they have been greatly hit by the COVID-19 outbreak.

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