Indonesia: Tax incentives could slash airfares by 40 percent: MTI analyst

• Jun 24, 2019

The government has been urged to provide airlines with incentives so that they can lower airfares, the costliness of which has been blamed for stagnation in the tourist industry.

Indonesian Transportation Society (MTI) aviation analyst Suharto Abdul Majid said on Sunday that the government should not instruct airlines to decrease the prices of airplane tickets without granting any incentives.

“I challenge the government; does it dare to have zero percent taxes for all components of airlines, like jet fuel, spare parts, airport service charges and other [components]? I believe it could cut airfares by up to 40 percent,” Suharto said as quoted by tempo.co.

Transportation Minister Budi Karya Sumadi issued three regulations this year to try to decrease airfares, but ticket prices have yet to see a significant drop.

Suharto said the introduction of incentives would help domestic airlines cut airfares without sacrificing the quality of their services.

“The government has to allocate incentives for business players, who have to increase the quality of their services, security and safety,” he added.   

A similar comment was made by Institute for Development of Economics and Finance (Indef) economist Bhima Yudhistira. “The incentives could include lowering landing fees, parking fees and loading fees [at airports],” Bhima said.

Coordinating Economic Minister Darmin Nasution previously said that the government was finalizing a draft regulation to provide incentives for airlines. (bbn)

Source: https://www.thejakartapost.com/news/2019/06/24/tax-incentives-could-slash-airfares-by-40-percent-mti-analyst.html