Indonesia to cut airline fees to support tourism amid coronavirus outbreak

Passengers with protective masks at Ngurah Rai International Airport in Bali, Indonesia, on Feb 8, 2020.
Passengers with protective masks at Ngurah Rai International Airport in Bali, Indonesia, on Feb 8, 2020.PHOTO: EPA-EFE

JAKARTA (BLOOMBERG) - The Indonesian government has stepped in to support the country's aviation and tourism industries to limit the damage the coronavirus outbreak has inflicted on airlines.

The measures will include cutting landing charges and airport fees for carriers, as well as providing incentives to hotels and tourism businesses in areas popular among Chinese holiday makers, such as Bali, Manado and the Riau Islands, Transport Minister Budi Karya Sumadi said in a statement on Thursday (Feb 13).

The ministry is projecting a 30 per cent drop in passenger volume for airlines because of the outbreak. The government has halted all flights to mainland China since the beginning of this month to limit the spread of the virus.

"The government will work together with airport operators, airlines and hotels to come up with the incentives," Sumadi said. "We want to boost the tourism industry and encourage people to take holidays."

Chinese visitors are the second-biggest group of overseas travellers to Indonesia after Malaysians. Tourism is a crucial component of the government's effort to bring in more foreign exchange revenue and address its current account deficit.

The outbreak also comes at a critical juncture for Indonesia's largest low-cost carrier, PT Lion Mentari Airlines, which has been planning an initial public offering. Flag carrier PT Garuda Indonesia was expected by analysts to post record earnings for 2019 and continue to boost profit in 2020 before the virus broke out.