The Secretary General of the Indonesian National Air Carriers Association (INACA), Bayu Sutanto, has called on the Indonesian government to issue an urgent decision to reduce customs duties on aircraft parts to 0%. This request arises at a time when airlines are struggling with increasing operational costs due to the continuous rise in global fuel prices.
Sutanto emphasized that this reduction would have a significant positive impact on the sector, as it would help alleviate the financial burdens on airlines, which in turn would positively reflect on air ticket prices. He noted that the government had previously committed to keeping local ticket price increases within the range of 9-13%, but this policy has yet to be translated into legal decisions.
Details of the Request
In an interview with Antara news agency, Sutanto explained that the policy to reduce customs duties has not yet been implemented, hindering companies' ability to adapt to the current economic conditions. He pointed out that current measures, such as reducing value-added tax on economy class flight tickets, have not been sufficient to stabilize the market.
On the other hand, aviation expert Alvin Lim confirmed that reducing customs duties to 0% is a critical step that has not yet been executed. He indicated that the government needs to issue the necessary regulations through the Ministry of Finance to activate this policy.
Background & Context
The aviation industry in Indonesia faces significant challenges due to the ongoing rise in fuel prices, which are among the largest operational costs. In recent years, fuel prices have seen sharp increases due to geopolitical tensions and fluctuations in global oil markets. This has led to higher air ticket prices, negatively affecting travel demand.
Indonesia is considered one of the largest aviation markets in Southeast Asia, with increasing demand for air travel. However, rising costs may hinder the growth of this vital sector, necessitating urgent action from the government to ensure the sustainability of the industry.
Impact & Consequences
If the policy to reduce customs duties on aircraft parts is implemented, operational costs are expected to decrease by approximately 3-4%. This reduction could help alleviate pressure on airlines, leading to stable ticket prices and an improved travel experience for citizens.
Additionally, lowering customs duties may enhance competition among airlines, resulting in better services for travelers. However, these policies require strong political support to ensure their effective implementation.
Regional Significance
The aviation industry in the Arab region also faces similar challenges, with airlines experiencing rising operational costs due to fuel prices. Indonesia's positive steps, such as reducing customs duties, may encourage countries in the region to adopt similar policies to improve the state of the aviation industry.
Ultimately, the Indonesian government's response to the demands of airlines could serve as a model for the region, contributing to economic growth and enhancing the travel experience for citizens.