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Higher Taxes for Older Planes?

Government Considers Granting Tax Incentives to Airlines that Maintain Newer Fleets.

(3/30/2009) Minister of Transportation, Jusman Syafi Djamal, has told the press that he is considering asking for higher tax rates for older planes operated by Indonesian air carriers as an incentive to drive a modernization of the country's air armada.

Behind the Minister's plan is the view that older aircraft are more frequently involved in "safety incidents" in Indonesia and have geneerally poor operating efficiencies.

As reported by the Bali Post, Jusman's proposal follows a number of flight safety incidents in early 2009 involving older aircraft, the latest occuring on March 25, 2009, when a Boeing 737-200 operated by Batavia Air cancelled a flight due to a leaking engine. Two days earlier, a Sriwijaya Air Boeing 737-200 made an emergency landing in Batam operating with a single engine.

The Minister's proposal has received the endorsement of the Chairman of the Indonesia Air Carriers Association (INACA), Emirsyah Satar, who also serves as the CEO of Garuda Indonesia. Admitting that older airplanes are less fuel-efficient, Emirsyah argued that any airplane maintianed to a high standard is never "too old" to fly, but admitted the Minister's proposed tactic was a valid way to encourgae a younger national air fleet.