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5 Airlines File Class Action Against Lion Air

Start Up Carrier Denies Charges of Selling Tickets Below Minimal Tariff Levels.

(8/15/2003) The Indonesian-language Bisnis Indonesia reports that 5 airlines have filed a class action complaint with the Department of Civil Aviation against Lion Air claiming the start-up domestic carrier has violated minimum tariff levels set by the Government.

The 5 airlines joining in the complaint are Garuda Indonesia, Mandala Airlines, Bouraq Airlines, Merpati Nusantara Airlines, and Pelita Air Services. To back their claim, the airlines have offered as proof a ticket purchased on the Batam-Jakata route for Rp. 279,020, while the minimum selling price set by the Government on this route is Rp. 296,000.

Lion Air have denied any wrongdoing citing that they had previously filed a "reference fare" with the Government on the subject routing of Rp. 275,000. Furthermore, Lion Air insists that its low-fare policy does not represent tariff dumping, claiming their operating cost per passenger on the route for a 167 passenger aircraft is Rp. 160,000 a figure well below their ticket price of Rp. 279,020.

A government regulation regarding monopolistic and unhealthy business practice passed in 1999 carry penalties of Rp. 25 billion (approximately US$ 2.9 million) and maximum imprisonment of 5 years.