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MINISTER of State-Owned Enterprises (BUMN) Erick Thohir revealed that the policy of reducing airfare prices for the 2024/2025 Christmas and New Year (Nataru) period, although it has the potential to increase losses for PT Garuda Indonesia Tbk (GIAA), is still a government directive that must be implemented.
Erick responded to the prediction that Garuda Indonesia would suffer greater losses due to this policy. “Yes, this is part of the task that we have to carry out,” Erick told reporters in South Jakarta on Wednesday (12/11), 2024.
He also said that although the reduction in airfares would affect the revenue of airlines, the government still supported the policy to benefit the community.
“We are happy that the people can feel it, not only in airfares. Based on the latest financial report, PT Garuda Indonesia recorded a net loss of US$131.22 million or about Rp 2.06 trillion in the third quarter of 2024, a figure that has ballooned by almost 81.3% compared to the same period last year,” he added.
Although Garuda Indonesia’s operating income grew by 15% to US$2.56 billion, the increase in income could not cover the increase in operating costs, which resulted in large losses.
According to aviation observers, although there has been a decrease in the airline’s operating costs such as discounts on aviation fuel prices and airport taxes, this still cannot fully offset the decrease in revenue due to the elimination of fuel surcharges.
“Avtur’s contribution to airline operating costs reaches 40%, and a 5% discount reduces costs by only about 2%, while airline revenues can fall by up to 8%. So, airlines still suffer losses of about 6%,” Alvin Lie recently.
The 10% airfare reduction policy will be effective for 16 days from December 19, 2024 to January 3, 2025 as part of the government’s initiative to boost the domestic tourism sector and increase people’s purchasing power during the year-end holidays.
In addition, PT Pertamina is also offering a discount on airfares and PT Angkasa Pura Indonesia is reducing airport tax and landing service fees by 50%.
Erick also added that the government is planning to prepare a roadmap for air ticket prices for the next five years, with the aim of reducing ticket price fluctuations at certain moments such as Eid al-Fitr and Christmas, which often burden the public.
Although this policy has the potential to increase losses for Garuda, the government hopes that its long-term impact can benefit society as a whole.
“This move is important to ensure that the public continues to enjoy more affordable fares, especially during the much-needed holiday season,” concluded Erick. [sources/photo special]
