Indonesia allows airlines to raise economy class fares as fuel prices soar

Indonesia has allowed passenger carriers to raise economy class fares amid surging fuel prices, to help ensure continuity of airline operations, its transportation ministry said.

Effective this week, fuel surcharges will be allowed to exceed the government-regulated price ceiling by up to 10% for jet plane flights and up to 20% for flights using propeller planes, ministry spokesperson Adita Irawati said on Tuesday.

The surcharges will be evaluated every three months and airlines can leave tariffs unchanged should they choose to, she said.

The measure comes ahead of the Eid al-Fitr festival in early May, during which millions of Indonesians travel to their hometowns. Airfares have risen lately, especially for those during Eid, and further increases could pressure inflation, which was already at a two-year high of 2.64% in March.

The increase in global oil prices have greatly affected costs for Garuda Indonesia and the flag carrier would review its cost structure, its chief executive Irfan Setiaputra said in a statement on Wednesday. He promised Garuda would maintain competitive airfares.