Minister Of Transportation Budi: Airline Ticket Prices Can Drop By Only 10 Percent

Minister of Transportation Budi Karya Sumadi (Photo: Mery Handayani/VOI)

JAKARTA - Minister of Transportation (Menhub) Budi Karya Sumadi revealed that the price of aircraft tickets could fall by 10 percent. According to Budi, this could happen after considering several aspects of the components of the aircraft ticket price formation.

Budi said there were at least four components that were recalculated in order to lower aircraft tickets in the country. For example, import tax for spare parts, avtur price regulations, VAT taxes, review cost flight routes.

Furthermore, Budi said that in the process there were only two ticket components that could be a factor in decreasing aircraft ticket prices, namely lowering spare parts import taxes and also avtur prices.

"So when we talk about more definitely numbers one and two, it's a decrease of about 10 percent. But we are still waiting for the final of these two things," he said at the DPR Building, Parliament Complex, Monday, September 9.

According to Budi, the decline in avtur prices can be done by opening the entrance for foreign companies selling avtur. That way it is hoped that there will be no monopoly on Avtur sales. As is known, currently only PT Pertamina is doing it.

Furthermore, Budi said that the entry of avtur sales from foreigners would form a more competitive price. Thus, there is the potential for avtur price reduction.

"This Avtur is also held in a meeting, it shouldn't be a monopoly and we should base it on what is called a multi-provider KPPu recommendation. So there are some providers who do (sales avtur)," he explained.

Budi said the 10 percent decrease in ticket prices could also be done by exemption from import parts tax. Currently, the average aircraft parts are still imported from outside.

As for the component of the decrease in VAT, Budi admitted that it was difficult to get the blessing of the Ministry of Finance (Kemenkeu). The reason is, this will have an impact on state revenues.

"Regarding VAT, indeed when compared to other countries, there is no VAT (flight). However, in discussions with the Minister of Finance, we understand that if VAT is eliminated, then there are other VATs that must be lost. So it is indeed a dilemma for VAT matters," he said.

Finally, continued Budi, re-weighting the cost of airline travel can be done to see and find more efficient flight routes. So that it can reduce the consumption of avtur, imposition of airport taxes to increase the age of airline parts.

"If the road decision decreases. If not, then you can't. So we are still waiting for the Ministry of Finance too," he said.