INACA urged the government on Wednesday (Mar 25) to approve the hikes for both jet and propeller aircraft amid mounting costs. Aviation fuel has nearly doubled in price, rising from between US$85 (S$108) and US$90 per barrel last month to between US$150 and US$200 per barrel.
INACA secretary general Bayu Sutanto said the move was necessary because the rising exchange rate has burdened national airlines’ finances.
“Fuel costs account for up to 35 per cent of total operating expenses, so the consequence (should be) higher ticket prices,” Bayu, who is also president director of private airline TransNusa Aviation, told Nikkei Asia on Wednesday.
“Seventy per cent of airline operational costs are in US dollars, while national airlines’ revenues are in rupiah. So, with the rising US dollar exchange rate, the financial burden on national airlines increases,” Bayu said.
The rupiah has declined more than 20 per cent from 14,136 rupiah per US dollar in 2019 to around 17,000 rupiah in March 2026.
Bayu said tensions between Iran and the US-Israel alliance since February have triggered a spike in oil prices due to disrupted supply from the Middle East after Iran blocked the Strait of Hormuz, a key shipping passage.
The conflict has caused 20 major global airlines to lose up to US$53 billion, marking the largest loss since the COVID-19 pandemic, according to calculations by the Financial Times last Saturday.
Bayu added that some airlines have already increased fuel surcharges by 5 to 70 per cent. They include Cathay Pacific, Qantas, Air India, Thai Airways and Air France-KLM, according to Business Insider.
INACA also proposed several temporary measures including postponing value-added tax (VAT) for aviation fuel and domestic tickets, relief on aircraft landing, parking and storage service fees, and the rescheduling of airport and navigation fee payments.
Director-general Lukman said the government will continue monitoring the country’s fiscal conditions and public interest before granting any proposals, adding that every policy must be balanced between industry sustainability and consumer protection.
“Thus, air transport services will remain maintained in terms of safety, security, affordability, and national connectivity,” he said.
Additional reporting by Denny Armandhanu
https://www.channelnewsasia.com/asia/indonesia-mulls-airlines-call-15-percent-fuel-surcharge-hike-iran-war-6020751
