Expensive Airline Tickets, KPPU Reminds Airline Companies Not To Use Monopoly Power To Set High Fares

Soekarno Hatta Airport. (Photo: Wikimedia Commons)

JAKARTA - The Business Competition Supervisory Commission (KPPU) of Regional Office I reminded airlines not to use their monopoly power to set high flight fares.

"The air transportation market is an oligopoly, even on some routes it becomes a monopoly, so it is necessary to monitor the behavior of business actors so as not to use power to set excessive tariffs", said Head of KPPU Regional Office I, Ridho Pamungkas in Medan, quoted from Antara, Thursday, August 11.

According to him, consumers, especially those who need it, don't have many choices, so when flight fares rise sharply like today, they are still bought.

In fact, the expensive flight fares not only make it difficult for consumers but also push up the inflation rate. In July 2022, inflation in North Sumatra which was recorded at 0.31 percent, for example, was driven by an increase in air transport fares.

The air transportation group contributed significantly to the inflation rate, which was 1.43 percent.

"Inflationary pressure in this sector is predicted to rise further following the Ministry of Transportation's policy KM 142 of 2022, August 4, 2022, which allows airlines to increase ticket prices to a maximum of 15 percent of the upper limit fare (TBA) for jet type aircraft.

And a maximum of 25 percent of the TBA for propeller-type aircraft.

"KPPU Kanwil I has discussed with the Kualanamu Airport Authority regarding the air transport tariff policy", he said.

Quoting the statement from the Head of the Airport Operations Section, Sigit Yudha P Munthe, Ridho said that the increase in airline ticket prices was unavoidable because the Avtur price continued to rise since January 2022. From January to July, the Avtur price increased by 64.4 percent, from the price of IDR 12. 099.91/liter to IDR 19,889.31/liter.

With the expensive aviation fuel price and by the provisions of the Ministry of Transportation, the Medan-Padang ticket price with a propeller plane with more than 30 seats, the upper limit fare is IDR 1,555,000. Plus airport tax, VAT, fuel surcharge, and other costs, the maximum ticket price according to the provisions is IDR 1,965,828.

"KPPU submits fully to the airport authorities and the Ministry of Transportation if it is found that there are airlines that sell tickets above the provisions", he said.

The public is asked to report to the airport authority if they find ticket prices that are above the provisions.