Indonesia raises jet fuel surcharge, flight ticket prices as oil soars

JAKARTA – Indonesia announced on April 6 a 28-percentage-point rise in the surcharge on jet fuel, and said it will allow airlines to raise the domestic ticket price, which the government caps, by up to 13 per cent.

As global oil prices soar on the back of the Middle East war, Economy Minister Airlangga Hartarto told reporters the jet fuel surcharge would rise from 10 to 38 per cent, and the base ticket price between nine and 13 per cent.

South-east Asia’s largest low-cost carrier AirAsia X said on April 6 it, too, was raising ticket prices and cutting routes to cushion the impact of the war on Iran.

In Jakarta, Mr Airlangga said the government would bear the 11 per cent value added tax on domestic flight tickets to offset the impact of the price rise on travellers.

“The amount of subsidy given by the government is around 1.3 trillion rupiah (S$98 million) per month,” the minister said.

The measures would be re-evaluated after two months, he added, depending on whether “the war in the Middle East continues”.

Global crude prices have soared to more than US$100 per barrel since the United States and Israel unleashed a series of strikes on Iran on Feb 28, sparking a regionwide conflict and the effective closure of the crucial Strait of Hormuz.

At Jakarta’s Soekarno-Hatta International Airport, the price of jet fuel for domestic flights has increased more than 70 per cent since March, according to the website of state oil company Pertamina.

For international flights, the price has nearly doubled.

The government insisted on April 6 it would not cut its subsidy on domestically-consumed gasoline and natural gas, however.

The subsidy covers about 30 to 40 per cent of the cost for consumers and consumes a large chunk of the annual budget in South-east Asia’s most populous nation.

Jakarta’s 2026 fuel subsidy calculation was premised on a global oil price of US$70 per barrel, and the government is legally required to keep the fiscal deficit at no more than 3.0 per cent of GDP.

“With savings here and there, we can ensure that the deficit will still be around 2.9 per cent,” Finance Minister Purbaya Yudhi Sadewa said at the same news conference on April 6.

“I want to emphasise that the subsidised fuel price will not be raised until the end of the year. And my budget is adequate.”

Mr Airlangga also announced the government would eliminate the import duty on aircraft spare parts in a bid to lower airline operational costs.

Jakarta announced in March fuel rationing and mandated work from home for civil servants as it seeks to conserve energy stocks.

Several Asian airlines have raised their fuel surcharges, and many worldwide have upped fares to reflect the increase in jet fuel prices. AFP