Heaptalk, Jakarta — AirAsia Indonesia revealed several factors that caused the high cost of plane tickets in Indonesia. CEO of Capital A Berhad, Tony Fernandes, explained three main factors that caused the high flight prices, including the expensive fuel price, double duties, and the policy regarding the threshold rates for domestic flights.
Regarding the expensive fuel price, Tony affirmed, “The fuel price in Indonesia is 28% higher than other countries, or the highest in ASEAN”.
He, even, mentioned that the avtur prices in Indonesia is highest in the world. The high price is caused by the domination of the business players in Indonesia.
“Compared to Malaysia, they have several distributors for avtur. Meanwhile, in Indonesia, avtur is fully provided by PT Pertamina,” added Tony.
As cited in PT Pertamina’s website, the avtur price on September is Rp13,211,311 per litter or USD86 cent (USD1 equals Rp15,429).
Moreover, Tony underscored the double duties that were applied in the archipelago. Tony stated, “VAT is applied not only to airlines, but also to tourist. Then there is duty for purchasing spare parts. Meanwhile we have discussed to eliminate import taxes with the Finance Ministry”.
“So, when we send the spare part abroad to fix it, we have to pay the duty when the spare part is returned,” conveyed Tony.
Tony also mentioned that instead of reducing the ticket price, ironically, the regulation concerning threshold rate for domestic flight worsen the condition, triggering the plane ticket to soar.
“The policy concerning threshold rate makes airlines tend to apply the highest price,” stated Tony. For this reason, Tony hopes the Government can conduct a further review of this policy.
In addition, Tony also mentioned that the currency exchange rate strongly impacts plane ticket prices.
“When the Rupiah exchange rate is contracted, the price also will rise,” conveyed Tony.
