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Debate Rages Over Cheap Domestic Air Tickets

New Domestic Carrier Lion Air Takes Heat from Jakarta Lawmakers Who Accuse Them of 'Ticket Dumping.'

(7/14/2003) A story in the Indonesian-language Bisnis Indonesia reports that members of the Indonesian House of Representatives (DPR) have called on the Department of Transportation to apply sanctions against Lion Air - one of Indonesia's numerous new domestic air services for violating minimum selling prices rules for their tickets.

According to the lawmakers, Lion Air has managed to ruin the local market, causing the passenger loads on Garuda Indonesia and Merpati Nusantara to drop dramatically. According to some of the complaining legislators, the start-up carrier sold tickets below agreed minimums and, in fact, at prices below the actual operating costs of the flights in question.

Lion Air has responded to the charges, insisting that their ticket sales conform to all current regulations, offering 4 sub classes of economy tickets and one level of executive class fares.

The airline also dismissed the view that their special promotion rates are a a short-lived affair designed to ruin the market, insisting that they were prepared to be bound by a long-term agreement with the Department of Transportation to offer cheap air fares to the public.

Lion Air explained that superior operating efficiencies and favorable charter rates allow them to offer air fares attractive to Indonesia's middle and lower-middle class market strata.

Due to recent dergulation of Indonesia's air transportation system, a number of new carriers are providing the flying public with a wide range of choices, both in terms of services and fares. In some instances, air fares now compete with the cost of overland buss travel between the same destinations. As a result, the number of busses operating between Jakarta and Medan (Sumatra) has decreased over the past two years from 294 busses operated by 15 companies to the current status of only 105 busses run by just 4 companies.