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Government to Control Domestic Air Tariffs?

Minimum Selling Prices for Domestic Air Tickets May be Introduced in February 2005.

(1/1/2005) The Government is considering introducing minimum prices for domestic air tickets effective from February 2005. The mandated price under which airlines will be prohibited from selling tickets is estimated to be around 30% of a stipulated maximum selling price for economy class tickets.

The planned price controls on domestic plane tickets were revealed recently by Cucuk Suryo Suprojo, the Director General of Civil Aviation, as a means to stem unhealthy competition among the sudden proliferation of domestic air carriers.

If the new policy is introduced the minimum fare on the route Jakarta-Medan would be approximately 30% of the current maximum fare of Rp. 1,2 million or Rp. 360,000 (approximately US$40). The equivalent minimum fare on the sector Jakarta-Surabaya would become Rp. 210,000 (approximately US$23.30).

The Director General did not discount the possibility that the price controls on domestic air tickets might not be introduced in February, if the proposed move was widely opposed by the operating airlines and the flying public.