4 Components in Airline Tickets Contributing to Its Price Hike

TEMPO.CO, Jakarta The year-on-year inflation as of July this year which reached 4.94 percent contributed to the rise in airline tickets as it exceeds the government’s initial projection of 3 percent with a 1 percent plus or minus.

One of the causes of this inflation can be traced back to the food volatile inflation that reached a staggering 11.47 percent (YoY) which was projected to be 6 percent at its maximum. Meanwhile, administered prices, which contain airline tickets, reached 6.51 percent.

What are the components of an airline ticket price?

Citing the Transporation Ministry’s Regulation No.20 / 2019 Article 2, airline passenger tariffs for economy class services for domestic scheduled commercial air transportation are calculated based on the following components: distance tariffs, taxes, mandatory insurance contributions, and surcharges.

  1. Distance Rates

The components of the flight ticket distance are differentiated based on the type of aircraft used. Namely, air freight rates using propeller-type aircraft and jet-type aircraft. The amount of the distance fare is the upper limit of the passenger fare for economy class commercial air transportation services. This distance fare is applied based on the service group provided by the Scheduled Commercial Air Transport Business Entity as stipulated in the Ministerial Regulation

Tariffs based on service groups for Scheduled Commercial Air Transport Business Entities consist of the application of a tariff of 100 percent of the maximum tariff that provides services with a maximum standard (full services), the application of a maximum tariff of 90 percent of the maximum tariff for services with medium standards (medium services). ), and the application of a maximum tariff of 85 percent of the maximum tariff for services with minimum standards or no-frills services.

  1. Taxes

The tax components as referred to in article 2 of the Regulation of the Minister of Transportation No. PM 20 of 2019 is regulated based on the provisions of the laws and regulations regarding taxation.

  1. Mandatory Insurance Contributions

The component of compulsory insurance contributions according to the Transportation Minister’s Regulation No PM 20/2019, refers to the provisions of the legislation regarding mandatory insurance contributions.

  1. Surcharges

The surcharge component is determined through a Ministerial Decree or through the approval of the Minister. This cost component is imposed in the event of conditions such as fluctuations in fuel prices, costs borne by air transportation companies during holidays, or fees charged to passengers due to additional services provided by air transportation business entities.

In addition to the component-based calculations, in certain cases, the Minister may stipulate an upper limit on air ticket fares by considering, among other things, the airport’s operating capability, and the aircraft’s capacity for the maximum number of passengers to be transported.

HENDRIK KHOIRUL MUHID

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