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THREE State-Owned Enterprises (BUMN) airlines, namely Garuda Indonesia, Citilink and Pelita Air, plan to be merged by the government. So can this potentially reduce the price of plane tickets? Garuda, as a full service airline, has far higher ticket prices than Citilink and Pelita Air, which are low cost carriers (LCC).
According to aviation observer Alvin Lie quoted from kompas.com, Tuesday (8/22), 2023 said that the merger of these three state-owned airlines could not reduce the price of airplane tickets. Ticket rates will not go down.
“The three airlines have different service classes with different rates and target markets. So far, Garuda Indonesia has targeted upper-class consumers with full service, Citilink has targeted middle-class consumers, and Pelita Air has targeted lower-middle class consumers,” he said.
Therefore, according to him, the determination of ticket rates will be confusing because the upper limit tariff provisions for full service airlines with low class consumers (LCC) are different. Even though the limit tariff provisions from the government will determine the price of airplane tickets.
“The permits are also different because for domestic flights there is a different upper limit for full service, for medium, and for LCC the upper limit is different. What will this be like?” he explained.
Apart from that, he continued, from the consumer side it is also confusing in choosing a flight class if these three airlines are combined. What can be the expectations (consumers) if the brand is the same.
Logistics Cost
One of the reasons the government wants to merge Garuda Indonesia, Citilink and Pelita Air airlines is to reduce logistics costs so that it will make it easier for the business world in Indonesia.
Meanwhile, Minister of State-Owned Enterprises (BUMN) Erick Thohir encouraged efficiency to continue to be the main agenda for state-owned companies. So, after the merger is carried out at Pelindo in 2021, it will continue with other BUMN clusters, namely airlines.
“BUMN continues to reduce logistics costs. Pelindo from four (companies) into one. Previously, logistics costs reached 23%, now it is 11%. We are also trying to merge Pelita Air, Citilink and Garuda to reduce costs,” he remarked.
However, according to Alvin, the plan to merge state-owned airlines will not necessarily reduce logistics costs. Can it make airline fares more affordable? No. No, instead I’m worried about being inefficient.
He further explained, there are many factors that affect logistics costs while the freight rates on airplanes are only a small part. Logistics costs are not only transportation costs. Warehousing costs, cargo terminals, loading and unloading costs, cargo agent service fees, sea cargo expedition (EMKL) and air cargo expedition (EMKU) and so on how?
“It’s useless to control airplane ticket prices, but airport fees keep going up, out of control,” he said. [kompas.com/photo special]
