The cheapest economy class tickets are about to become less cheap after the government today raised the price floor for airline tickets due to rising aviation fuel costs.
The price floor, now at 35%, was set previously at 30% of the price ceiling for any given route in a 2016 Transportation Ministry regulation. For example, if the highest possible ticket price allowed by the government for one particular route is IDR1 million, then the cheapest option for that same route can’t be below IDR350,000.
The regulation only applies on domestic flights. “We raised the price floor up to 35%,” Transportation Ministry Budi Karya Sumadi said today, as quoted by Kompas.
Indonesian airlines have been demanding the raising of the price floor for months amid rising operations and fuel costs, the latter of which has increased by 40% since 2016. Some airlines previously demanded that the price floor be set at 40% of the price ceiling.
“We are thankful. But we hope there will be more progress,” Pahala N Mansyuri, first director of flag carrier Garuda Indonesia, told Kompas.
Airlines selling tickets that don’t comply with the government’s price regulations stand to receive sanctions such as suspension of flight routes. The Transportation Ministry says the price floor is necessary to ensure safety and service standards aren’t neglected in place of cheap tickets.
