INACA Welcomes Government Efforts To Reduce Aviation Industry Costs

Illustration. (Photo: Doc. Antara)

The Association of Indonesian National Aviation Airlines (INACA) welcomes the government's efforts to reduce costs in the national aviation industry.

"With the reduction in costs, it is hoped that airlines will get a profit margin from their operations so that airlines can carry out flight operations properly," said INACA Chairman Denon Prawiraatmadja in a statement in Jakarta, quoted from Antara, Wednesday, July 17.

Denon assessed that with this effort, INACA can assist the government in developing national flight connectivity.

INACA also welcomed the establishment of the Supervision Task Force for National Aviation Transport Ticket Prices. However, so that this committee runs effectively, what must be considered is who its members are, what their authority is, what their work program is and how to implement it.

Denon said that the problems that surround national flights are very complex and involve various ministries and institutions.

"For this reason, the committee must be really strong both legally and operationally and involve various aviation stakeholders, so that its performance is good and correct," said Denon.

According to him, currently the flight costs are very high, exceeding the ticket rates set by the government since 2019. As a result, airlines have lost and operated flights to just be able to live and cannot develop their businesses.

"High costs originating from operational and non-operational flights must be reduced or eliminated," he said.

He revealed that the high cost of flight operations, for example, is a higher aviation fuel price than neighboring countries, there are queues of aircraft on land to fly and in the air to land that have the potential to waste fuel, airport costs and flight navigation services and others.

Meanwhile, the high costs of non-flight operations, for example, are various taxes and import duties that are applied in a multiplier manner.

"Currently taxes are imposed starting from taxes for avtur, taxes and duties for aircraft and spare parts such as import duties, import income tax, VAT and VAT BM spare parts, to VAT for aircraft tickets. Thus there is a double tax. Even though in other countries there are no taxes and duties, "said Denon.

He also said that most of the flight costs were directly or indirectly affected by the US dollar exchange rate. Thus, the stronger the US dollar value of the rupiah, the flight costs will also increase.

"This must also be anticipated and a joint solution is found," said Denon.

In addition, the cost of airport services for passengers (Passenger Service Charge / PSC) included in the ticket price component also makes the ticket price look higher.

"The passenger does not know that the PSC is not for airlines but for airport managers. However, because it is in one component, the passenger considers it part of the flight ticket from the airline," said Denon.

Furthermore, INACA also highlighted the current unhealthy aviation business climate. This is because there is still a monopoly in the aviation business so that price settings occur by one party and there is no healthy business competition.

Some of the current monopolies include monopoly on avtur providers at airports, monopoly on airport management by the government, both through BUMN and BLU and UPBU of the Ministry of Transportation, as well as monopoly on flight operations from certain airlines or airline groups.

"In order to create a business climate and a healthy business competition, this monopoly must be minimized or eliminated. One example of minimizing the monopoly of flight operations is better flight slot management," said Denon.

Management of slots must be based on the principle of justice for airlines and market power. The distance between airline slots must be considered so that unhealthy competition does not occur.

In addition, slot managers must strictly enforce the rules so that airlines comply with applicable rules. Unused slots in a certain period must be immediately withdrawn and filled by other airlines.

However, the government must also pay attention to airlines flying the virgin route, namely routes that previously did not have flights.

"The government must provide protection to the airlines that first fly it within a certain period of time by continuously evaluating the aviation market in the area," he also said.

The addition of flights by other airlines can only be carried out when the market is strong and the first airline has already made a profit.

"Thus there is healthy business competition and on the other hand passengers also get better service," said Denon.