Indonesia announces maximum airfare increase of 13%; government subsidies and tax exemptions to stabilize prices

The Indonesian government on April 6 announced that it will raise the aviation fuel surcharge rateby 28 percentage points, and at the same time allow maximum domestic airfares to beincreased by 13%.

Coordinating Minister for Economic Affairs Airlangga Hartarto said that, affected by a sharp rise in global oil prices due to the war in the Middle East, Indonesia's aviation fuel surcharge will be raised from10% of the ticket price to 38%; domestic airfares will generally beraised by 9% to 13%.

To control the extent of the price increases and ease the burden on passengers, the Indonesian government will bearan 11% value-added tax on economy-class domestic tickets, and provide monthlyIDR 1.3 trillion (about USD 76.33 million) in subsidies. The above measures will be reassessed after two months, depending on developments in the Middle East conflict.