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Higher Domestic Airfares Ahead?

Rising World Oil Prices Cause Indonesian Airlines to Increase Fuel Surcharges.

(10/27/2007) Tempo Interaktif reports that a number of Indonesian carriers are eyeing fare increases in the face of surging fuel costs.

PT Merpati Nusantara is planning to increase their fuel surcharge to Rp. 104,000 (approximately US$11.30) from the present level of Rp. 88,000 (approximately US$9.56) on November 1, 2007.

The President Director of Merpati, Hotasi Nabanan told the press that the exact amount of any fuel surcharge is subject to change, and will reflect the latest movement in international oil prices.

Fuel Surcharges are not included in ticket prices and charged separately to passengers. According to Hotasi, fuel costs now amount to nearly 50% of the total operating costs of an airline.

Sriwijaya Air have also indicated that they will likely impose a Rp. 80,000 (approximately US$8.70) fuel surcharge in November to meet the rapidly escalating cost of fuel.

Mandala Airline has confirmed that their Rp. 80,000 fuel surcharge remains in place, saying the charge could increase in response to a changing fuel price situation.

Garuda Indonesia has also told the press to expect an increase in the fuel surcharge as oil prices have passed the US$90 a barrel price. Garuda's surcharge will increase from Rp. 80,000 to Rp. 100,000 (approximately US$10.87) effective November 1, 2007.