Indonesian Airlines - Photo: Special

JAKARTA (TheInsiderStories) – Welcome the beginning of 2019, Indonesian airlines sector is shocked by the issue of rising domestic flight fare and baggage fees policy. The unilateral determination not only troubles the public using air transport services, but also becomes a boomerang for the airline itself.

These caused, the determination of the increase in ticket prices without going through a good and structured procedure. In addition, to reduce the risk of social panic, the airline must first carry out socialization, and the escalation of ticket prices must be done in stages, so not harmed the consumers and not disrupt the purchasing power of the people.

The questions, is there really a kind of oligopoly or cartel practice among national airline business. Commonly, to raise or reduce flight fares its the airline’s internal policies, as long as they are stick to the regulations.

Since December 2018, Lion Air, Wings Air and PT Citilink Indonesia raised the ticket price and settled to paid the baggage. This, said the Chairman of the Indonesia National Air Carriers Association (INACA), Ari Askhara because of the fluctuations in domestic flight fare, were influenced by international oligopolies.

Moreover, he said, many airlines fight to survive to find new market segments. Then, Askhara explained, the operational costs and balance sheets of airlines tend to be negative as experienced by PT Garuda Indonesia Tbk (IDX: GIAA). Since 2017, this state-owned airline has continued to experience a bad financial performance.

The CEO of Garuda Indonesia noted that the weakening of the Rupiah and fluctuations in aviation turbine (avtur) prices set by PT Pertamina were the main drivers of the airline’s new provisions.

These provisions, he stated, have created a boomerang for the airline. For an example, data in December showed that the number of passengers in 2018 fell to 7.5 percent from the same month in the previous year.

At six major national airports, the number of passengers dropped by 13 percent. Likewise the movement of the aircraft fell 5.6 percent.

It means, the airline has reduced the number of flights to minimize operational costs. Gambling shows that the financial condition of national airlines is being critical.

In addition, the infrastructure development has the potential to influence the national public transportation map. Now, the airlines to compete with land transportation to win consumers.

Therefore, in the future, to advance and stimulate the national aviation business need a good collaboration and consolidation between the government, consumers and transportation or aviation associations to picture out the potential of a friendly aviation industry for all Indonesian people.

Written by Daniel Deha, Email: theinsiderstories@gmail.com