Indonesia takes steps to reduce flight costs and boost tourism

 The Indonesian government is working to reduce flight costs to and from the country, including to popular destinations such as Bali. Investment and Maritime Affairs Minister Luhut Binsar Pandjaitan announced plans to make aviation more efficient to reduce ticket prices.

On his social media, Minister Pandjaitan explained that they are evaluating aircraft operating costs to find savings. He highlighted that the cost per block hour (CBH) is the biggest expense and needs to be reduced. The government is developing strategies to reduce CBH depending on the type of aircraft and services.

Additionally, Minister Pandjaitan said the government will accelerate policies to waive import duties and lift restrictions on imported aviation goods, which are currently driving up airline costs and ticket prices. He added that maintenance costs, which account for 16% of total expenses after fuel, also need to be addressed.

Pandjaitan pointed out that Indonesia's flight tickets are currently the most expensive in ASEAN, second only to Brazil, which affects both domestic and international travellers. Although no specific timeframe was given, the National Air Transport Ticket Price Supervisory Committee reviews ticket prices on a monthly basis. In June, Dwi Marhen Yono, marketing director at the Ministry of Tourism and Creative Economy, said high aviation fuel prices and a reduced number of planes were driving up the cost of domestic flying, which was impacting tourists. High domestic flight costs prevent international tourists from exploring more of Indonesia and make travelling to Indonesia less affordable for long-haul visitors. Many tourists have to stop over in Jakarta to get to Bali, but rising domestic ticket prices make it more attractive to stop over in other countries such as Kuala Lumpur, Bangkok or Singapore. Last month, Yono confirmed that Minister Pandjaitan would meet Pertamina, a major fuel company, to discuss reducing fuel costs for airlines. Despite these challenges, Bali's I Gusti Ngurah Rai International Airport has seen interest from six major international airlines to increase flight routes from October 2024. Airport general manager Handy Herudhitiawan welcomed any airline interested in flying to Bali, provided there is availability and the aircraft meets capacity requirements.

Bali Airport has already served more than 11 million passengers this year, reflecting strong demand and suggesting the island will exceed tourism targets by the end of the year.