A BLOW TO AIRLINES
Surging domestic airfares are also expected to weigh directly on Indonesia’s tourism sector, said tourism expert Azril Azahari from Gadjah Mada University.
According to Azril, domestic destinations are becoming less price-competitive compared with overseas options, pushing travellers to consider more affordable trips abroad.
“Flying to Singapore can be cheaper than travelling to Raja Ampat, Komodo Island or even Bali,” he said.
Azril added that if no steps are taken to restore ticket prices to competitive levels, Indonesia’s tourism appeal could continue to erode amid growing regional competition.
Jennifer echoed the view that international routes can sometimes be cheaper. She noted that last week, a Medan to Jakarta journey via Kuala Lumpur, Malaysia, was priced lower than a domestic route transiting in Padang, which cost more than 3 million rupiah.
“At the time, there were no direct domestic flights to Jakarta, but I didn’t have my passport with me (for a Kuala Lumpur transit),” she said.
Transportation analyst Revy Petragradia from the Indonesian Transportation Society (MTI), a transport advocacy group, said travellers are likely to become more selective going forward, potentially leading to a “10 per cent to 15 per cent drop in air passenger numbers”.
“Business trips may continue as usual, but economy passengers and those travelling short distances will certainly think twice. A shift in transport modes – from air to land or sea – is likely for shorter routes,” Revy told CNA.
Rising jet fuel prices, coupled with declining passenger numbers, are expected to further strain airlines’ financial health.
National carrier Garuda Indonesia, for instance, recorded a net loss of 5.4 trillion rupiah in 2025 – nearly five times higher than the previous year.
MTI transportation expert Djoko Setijowarno said the current situation adds fresh pressure on airlines already hit by government restrictions on official travel, first introduced in late 2024 as part of a broader push to cut state spending.
“Passengers travelling on personal funds make up a relatively small portion – around 10 per cent, including leisure trips. The remaining 90 per cent consists of business travel funded by employers, both public and private,” he said.
“However, those travel budgets are now being reduced, as the government curbs such mobility,” he added.
In January last year, President Prabowo Subianto said the reduction in official travel had saved the state budget up to 20 trillion rupiah.
The government is expected to continue cost-cutting measures this year. Last week, Finance Minister Purbaya Yudhi Sadewa said authorities are preparing an efficiency and budget refocusing scheme to keep the 2026 state budget deficit in check amid rising oil prices and global uncertainty.
Purbaya is targeting savings of between 121.2 trillion rupiah and 130.2 trillion rupiah, focusing on cutting non-essential spending – including official travel, he added.
https://www.channelnewsasia.com/asia/indonesia-domestic-airfares-fuel-surcharge-airlines-6059731
