NO SUBSIDIES FOR ECONOMY CLASS AIRFARES

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STRATEGIC ASSESSMENT. Jakarta. Transportation Minister Budi Karya Sumadi said on Monday that the government would not provide subsidies on economy class airfares, saying that such subsidies would only be applied to “pioneer flights” to remote areas.

“There is no subsidy [for economy class tickets],” the minister said in response to a question about the matter at his office in Jakarta on Monday as quoted by kontan.co.id.

Budi also clarified a statement made by the Transportation Ministry’s director general of air transportation, Polana B. Pramesti, who said that the ministry was considering a proposal to provide subsidies for economy class airfares.

Transportation Ministry secretary-general Djoko Sasono supported the minister’s statement. “For the pioneer flights, we have allocated subsidies every year, but we have no plan to provide subsidies for the economy class,” Djoko added.

Djoko stressed that the government could not intervene in the prices of airplane tickets.

Previously, Budi had appeared open to the possibility of issuing a decree on airfares if airlines failed to significantly cut their ticket prices, which the government said it believed was responsible for the lack of growth of the tourism industry in many regions across the country.

He said the issuance of a ministerial decree on a subclass of airplane tickets would be the last option considered if the airlines did not accommodate the government’s policy (https://www.thejakartapost.com/news/2019/04/08/no-subsidies-for-economy-class-airfares-minister-says.html).

Meanwhile, an economic issue observer Agung Wahyudin said the government would not provide subsidies on economy class airfares, saying that such subsidies would only be applied to “pioneer flights” to remote areas will make airfares still high rate position and those could be endangered other economic sectors.

“Several sector such as tourism, hotel occupancy, and packaging dan delivery order services are impacted from those policy and finally during political years it could be politicized by Jokowi’s opponent,” Agung Wahyudin uttered (Red).


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