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This Is The Reason Why Garuda Indonesia's Flight Ticket Prices Are High

PT Garuda Indonesia has revealed several challenges faced by the airline, which have resulted in high ticket prices that are unaffordable for some consumers. 

During a Hearing Meeting of Commission V of the Indonesian House of Representatives, which oversees infrastructure and transportation, with the Directorate General of Air Transportation of the Ministry of Transportation in Jakarta on Thursday, Garuda Indonesia's President Director Wamildan Tsani explained that there are at least three main challenges confronting airlines, including those in Indonesia. 

Firstly, since the last determination of the upper limit tariff (TBA) in 2019, the airline's cost structure has changed significantly, primarily due to the increase in jet fuel prices and maintenance expenses. 

Secondly, the fluctuation of the rupiah against the US dollar since 2019 has also had a substantial impact. 

Thirdly, the airline's profit margins are extremely tight, making them vulnerable to a decrease in load factor or the number of passengers. 

"A decrease in load factor or the number of passengers by 3-5 percent significantly affects the profit margin of the airline," said Wamildan. 

As an illustration, Wamildan mentioned that a flight on the Cengkareng-Denpasar route in 2019 required a cost of IDR 194 million. However, currently, the total cost has risen to IDR 269 million, an increase of 38 percent. 

He also highlighted that cost components based on the US dollar exchange rate, such as maintenance, repair and operations (MRO), jet fuel, aircraft leasing, and marketing and service costs, further exacerbate the pressure on the airline's margins. 

He noted that the increase in foreign exchange rates by 14-15 percent since 2019 has directly impacted the airline's expenditures. 

"We can see from the analysis data from the International Air Transport Association (IATA) that from 2012 to 2019, the entire aviation ecosystem experienced an increase in margins or profits, except for airlines. This occurred even before the pandemic," he stated. 

In response to this situation, Garuda Indonesia has proposed an adjustment option for the TBA. The amount is still in the finalization stage with the Directorate General of Air Transportation. 

Tag: Airline's Garuda Indonesia IATA