Avtur Prices Creep Up, Government Sets Aircraft Spare Parts Import Duty at 0 Percent

Jakarta - The government has given an incentive policy to the aviation industry in the form of a reduction in aircraft spare parts import duties to 0 percent.

This is in response to the increase in the price of jet fuel as aircraft fuel. In a press conference held on Monday, April 6 in Jakarta, Coordinating Minister for Economic Affairs Airlangga Hartarto explained that this policy is expected to reduce airline operating costs, given that previously the import duty on aircraft parts reached around Rp. 500 billion per year.

According to Airlangga, this policy also has the potential to strengthen the competitiveness of the national Maintenance, Repair, and Overhaul (MRO) industry. The reduction in spare parts prices will have a direct impact on lower maintenance and repair costs for aircraft in the country, so that the local MRO industry becomes more competitive compared to abroad.

With this increased competitiveness, domestic aircraft maintenance activities are projected to increase, which ultimately drives economic growth. Airlangga said this policy has the potential to increase economic activity by around US$700 million per year.

This policy will be followed up through the issuance of technical regulations by the Ministry of Finance (Kemenkeu) and the Ministry of Industry (Kemenperin). In addition to removing import duties on spare parts, the government also provides a Government-Covered Value Added Tax (PPN DTP) incentive of 11% for domestic economy class air tickets to hold off price spikes amid pressure on airline operating costs.

Through these various policies, the government has allocated fiscal support of IDR 1.3 trillion per month and this stimulus will be implemented for 2 months.

The government emphasized that this series of policies is part of efforts to maintain the sustainability of the national aviation industry, as well as to encourage efficient, productive, and resilient economic activities.