Domestic Aircraft Ticket Prices Soar, Luhut Will Perform Aviation Efficiency

Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan revealed that he was preparing flight efficiency measures and lower ticket prices following the large number of public complaints regarding the soaring domestic flight price.

"We have prepared several steps for flight efficiency and lower ticket prices, for example evaluating aircraft costs operations," said Luhut, quoted from an upload on his official Instagram @luhut.pandjaitan, Thursday, July 11.

The steps taken are for example evaluating aircraft costs operations.

He explained that the Cost Per Block Hour (CBH), which is the largest component of aircraft operating costs, needs to be identified with details of its formation.

"We also formulate a strategy to reduce the value of CBH, based on aircraft types and flight services. In addition, we also plan to accelerate the policy of exemption of Import Duty and the opening of certain imports of goods, for flight needs where the portion of maintenance is in 16 percent of the total portion after the avtur," explained Luhut.

According to him, the mechanism for imposing tariffs based on the route sector has implications for the imposition of two VAT rates, the Jasa Raharja Mandatory Contribution (IWJR), and the Passenger Service Charge (PSC), for passengers who make transfers/change planes.

Luhut said the tariff calculation mechanism needed to be adjusted based on airline operating costs per flight hour, which would have a significant impact on reducing the cost burden on flight tickets.

Another thing that is no less important, said Luhut, is the evaluation of the role of cargo income on airline revenues which often escapes attention.

"This can be a consideration in determining the price of the Upper Limit Tariff," added Luhut.

Luhut said the government would also review opportunities for Government-Borrowed Value Added Tax (VAT DTP) incentives for several priority destinations.

"As of the time this meeting was held, all of these steps above will then be commanded directly by the Supervision Committee for National Aviation Transport Ticket Prices. They will evaluate in detail the price of plane tickets every month," concluded Luhut.